UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549










FORM
20-F




















| | ☐ | REGISTRATION
                                         STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



OR



| | ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended June 30, 2018
| | - | ---------------------------------------------------------------------------------------------------------------------------



OR



| | ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



OR



| | ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -------------------------------------------------------------------------------------------



Commission file number 001-35723










BRASILAGRO
– COMPANHIA BRASILEIRA DE PROPRIEDADES AGRÍCOLAS

(Exact name of Registrant
as specified in its charter)



BrasilAgro - Brazilian Agricultural
Real Estate Company

(Translation of Registrant’s
name into English)



The Federative Republic of Brazil

(Jurisdiction of incorporation
or organization)



Av. Brigadeiro Faria Lima, 1309, 5th
floor, São Paulo - SP 01452-002, Brazil

(Address of principal
executive offices)



Gustavo Javier Lopez

Chief Administrative
Officer and Investor Relations Officer 
Tel.: +55 11 3035 5350, Email:ri@brasil-agro.com

Av. Brigadeiro Faria
Lima, 1309, 5th floor
 São Paulo - SP 01452-002, Brazil

(Name, Telephone,
E-mail and/or Facsimile number and Address of Company Contact Person)












Securities
registered or to be registered pursuant to Section 12(b) of the Act:



|Title
of each class                                                            | Name
of each exchange on which registered
|------------------------------------------------------------------------------ | -----------------------------------------
|American Depositary Shares, each representing one ordinary share, no par value | New York Stock Exchange                  
|                                                                               |                                          
|Ordinary Shares*                                                               | New York Stock Exchange*                 



| | * | Not for trading, but only in connection with the registration
of American Depositary Shares.
| | - | --------------------------------------------------------------------------------------------



Securities
registered or to be registered pursuant to Section 12(g) of the Act: None



Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report.



Ordinary shares, no par value          56,888,916



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒



If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes  ☐  No  ☒



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐.



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐No  ☐ (Note: None required for registrant)











Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging
growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth
company” in Rule 12b-2 of the Exchange Act:



|Large accelerated filer  ☐ | Accelerated filer  ☒ | Non-accelerated filer  ☐  
|-------------------------- | -------------------- | --------------------------
|                           |                      | Emerging growth company  ☒



If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.  ☐



Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|U.S. GAAP  ☐ | International Financial Reporting Standards as issued
by the International Accounting Standards Board  ☒ | Other  ☐
|------------ | -------------------------------------------------------------------------------------------------------- | --------



If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item
the registrant has elected to follow. Item 17 ☐  Item 18  ☐



If this is an annual
report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒













TABLE
OF CONTENTS







|                                                                                     | Page
|------------------------------------------------------------------------------------ | ----
|                                                                                     |     
|Part I                                                                               | 3   
|                                                                                     |     
|INTRODUCTION                                                                         | 3   
|                                                                                     |     
|ITEM 1—IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                         | 4   
|ITEM 2—OFFER STATISTICS AND EXPECTED TIMETABLE                                       | 4   
|ITEM 3—KEY INFORMATION                                                               | 4   
|ITEM 4—INFORMATION ON THE COMPANY                                                    | 18  
|ITEM 4A—UNRESOLVED STAFF COMMENTS                                                    | 30  
|ITEM 5—OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                  | 31  
|ITEM 6—DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                    | 46  
|ITEM 7—MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                             | 52  
|ITEM 8—FINANCIAL INFORMATION                                                         | 54  
|ITEM 9—THE OFFER AND LISTING                                                         | 59  
|ITEM 10—ADDITIONAL INFORMATION                                                       | 62  
|ITEM 11—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 83  
|ITEM 12—DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 85  
|                                                                                     |     
|Part II                                                                              | 86  
|                                                                                     |     
|ITEM 13—DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 86  
|ITEM 14—MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 86  
|ITEM 15—CONTROLS AND PROCEDURES                                                      | 86  
|ITEM 16A—AUDIT COMMITTEE FINANCIAL EXPERT                                            | 87  
|ITEM 16B—CODE OF ETHICS                                                              | 87  
|ITEM 16C—PRINCIPAL ACCOUNTANT FEES AND SERVICES                                      | 87  
|ITEM 16D—EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                  | 87  
|ITEM 16E—PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      | 88  
|ITEM 16F—CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT                                | 89  
|ITEM 16G—CORPORATE GOVERNANCE                                                        | 89  
|ITEM 16H—MINE SAFETY DISCLOSURE                                                      | 90  
|                                                                                     |     
|Part III                                                                             | 90  
|                                                                                     |     
|ITEM 17—FINANCIAL STATEMENTS                                                         | 90  
|ITEM 18—FINANCIAL STATEMENTS                                                         | 90  
|ITEM 19—EXHIBITS                                                                     | 90  





2







Part
I



INTRODUCTION



Unless
the context otherwise requires, the term “BrasilAgro” refers to BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas and its consolidated subsidiaries; and unless indicated otherwise, the terms “we,” the “Company,”
“our” or “us” refer to BrasilAgro. The term “Brazil” refers to The Federative
Republic of Brazil.



Presentation
of Financial Information



All references herein
to “Real,” “Reais” or “R$” are to the Brazilian real, the official currency of
Brazil. All references to “dollars” or “US$” are to U.S. dollars.



On
June 30, 2018, the end of our last fiscal year, the exchange rate for Reaisinto U.S. dollars was R$3.8552 to US$1.00, based
on the selling rate as reported by the Central Bank of Brazil (Banco Central do Brasil), or the Central Bank. On June 30,
2017, the selling rate was R$3.3082 to US$1.00. The selling rate was R$3.2098 to US$1.00 on June 30, 2016, R$3.1026 to US$1.00
on June 30, 2015 and R$2.2025 to US$1.00 on June 30, 2014, in each case, as reported by the Central Bank. The Real/U.S.
dollar exchange rate fluctuates widely, and the selling rate on June 30, 2018 may not be indicative of future exchange rates. On
September 30, 2018, the selling rate was R$4.0033 to US$1.00 and, on October 25, 2018, the selling rate was R$3.7014 to US$1.00,
as reported by the Central Bank. See “Item 3—Key Information—Exchange Rates” for information regarding
exchange rates for the Real since June 30, 2014.



Financial Statements



We
maintain our books and records in Reais. Our fiscal year is from July 1 of each year to June 30 of the following year. Our
consolidated financial statements as of June 30, 2018, 2017 and 2016 and for the years ended June 30, 2018, 2017 and 2016 have
been audited.



We
prepare our annual consolidated financial statements in accordance with International Financial Reporting Standards, or IFRS, as
issued by the International Accounting Standards Board, or the IASB.



Crop Year, Harvest and Planting Season



Our
agricultural production is based on the crop year, which varies according to each crop. The crop year for sugarcane is from January
1 to December 31 of the same year, and the crop year for grains is from July 1 to June 30 of the following year. We also make reference
to the planting season and the harvest season, or harvest period. In Brazil, the planting season for grains is from September to
December, and the planting season for sugarcane is from February to May. The harvesting period in Brazil for grains is from February
to July, and such period for sugarcane is from April to November.



Market Information



The
market information included herein concerning the Brazilian economy and the domestic and international agriculture industry was
obtained from market research, publicly available information and industry publications from established public sources, such as
the Central Bank, the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística),
or the IBGE, the Brazilian Food Supply Company (Companhia Nacional de Abastecimento), or Conab, a state-owned company, the
Brazilian Ministry of Agriculture, Livestock and Food Supply (Ministério da Agricultura, Pecuária e Abastecimento),
or MAPA, the U.S. Department of Agriculture, or USDA, the U.S. Food and Agriculture Organization, or FAO, the United Nations, and
the Organization for Economic Cooperation and Development, or OECD, as well as from other public institutions and independent sources
as indicated throughout this annual report. We believe that such information is true and accurate as of the date it was made available,
although we have not independently verified it.



3







Rounding



Some percentages and amounts
included herein have been rounded for ease of presentation. Accordingly, figures shown as totals in certain tables may not be arithmetic
aggregations of the figures that precede them.



Emerging Growth Company Status



We
are an “emerging growth company,” as defined in Section 3(a) of the Securities Exchange Act of 1934, as amended, or
the Exchange Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, or any Public Company Accounting Oversight
Board, or “PCAOB,” rules, which, if adopted in the future, would require mandatory audit firm rotation and auditor
discussion and analysis pursuant to any future audit rule promulgated by the PCAOB (unless the U.S. Securities and Exchange Commission,
or the SEC, determines otherwise). We take advantage of the exemption from providing an auditor’s attestation report and
may decide to rely on other exemptions in the future, such as compliance with certain PCAOB rules. We do not know if some investors
will find our common stock less attractive as a result. The result may be a less active trading market for our common stock and
our stock price may become more volatile.



We
could remain an “emerging growth company” until the earliest of (a) the last day of the first fiscal year in which
our annual gross revenue exceeds US$1 billion, (b) the last day of our fiscal year following the fifth anniversary of the date
of our first sale of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933,
as amended, or the Securities Act, (c) the date on which we have issued more than US$1 billion in non-convertible debt during the
preceding three-year period, or (d) the date on which we become a “large accelerated filer” as defined in Rule 12b-2
under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds US$700
million as of the last business day of our most recently completed second fiscal quarter.



Forward-Looking Statements



This
annual report on Form 20-F includes statements that constitute forward-looking statements. These statements are based on the beliefs
and assumptions of our management and on information available to management at the time such statements were made. Forward-looking
statements include, but are not limited to: (a) information concerning possible or assumed future results of our operations, earnings,
industry conditions, demand and pricing for our services and other aspects of our business described under “Item 4—Information
on the Company,” “Item 5—Operating and Financial Review and Prospects” and “Item 11—Quantitative
and Qualitative Disclosures About Market Risk”; and (b) statements that are preceded by, followed by or include the words
“believes,” “expects,” “anticipates,” “intends,” “is confident,” “plans,”
“estimates,” “may,” “might,” “could,” “will,” “would,”
the negatives of such terms or similar expressions.



Forward-looking
statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Although we make such statements
based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially
from our expectations. Many of the factors that will determine these results are beyond our ability to control or predict.



Any
of the risk factors described under “Item 3— Key Information—Risk Factors” and those described elsewhere
in this annual report on Form 20-F or in our other filings with the SEC, among other things, could cause our results to differ
from any results or conditions that might be projected, forecasted or estimated by us in any such forward-looking statements.



We
undertake no obligation to publicly update any forward-looking statement, whether because of new information, future events or
otherwise, except as required by applicable law or stock exchange regulation. Investors are cautioned not to put undue reliance
on any forward-looking statements.



ITEM
1—IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not applicable.



ITEM
2—OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.



ITEM
3—KEY INFORMATION



| | A. | Selected Consolidated Financial Data
| | -- | ------------------------------------



We prepare our annual consolidated financial statements
in accordance with IFRS as issued by the IASB.



Due
to the nature of our business and the harvesting periods in the locations where we operate, our fiscal year ends on June 30 of
each year. References in this annual report on Form 20-F to a specific fiscal year relate to the fiscal year ended on June 30 of
that calendar year, unless indicated otherwise.



The
selected financial data has been derived from our audited consolidated financial statements as of June 30, 2018, 2017, 2016, 2015
and 2014, and for each of the five years ended June 30, 2018. The information set forth below is qualified by reference to, and
should be read in conjunction with, our audited consolidated financial statements and the notes thereto and also “Item 5—Operating
and Financial Review and Prospects” included in this annual report.



Effects of the adoption of the amendments to
IAS 41 and IAS 16



In
2014, the IASB amended IAS 16 and IAS 41, which distinguish bearer plants from other biological assets. Bearer plants are solely
used to grow produce over their productive lives and are seen to be similar to an item of property, plant and equipment and under
the scope of IAS 16, rather than other biological assets under the scope of IAS 41. However, the agricultural produce growing on
bearer plants remains within the scope of IAS 41 and is measured at fair value less cost to sell. The amendments were applicable
for our fiscal year ended June 30, 2017.





4









Our
sugarcane plantations qualify as bearer plants under the new definition in IAS 41. As required under IAS 8, “Accounting Policies,
Changes in Accounting Estimates and Errors,” we effected the change in accounting policy retrospectively as of July 1, 2014.
Consequently, effective from our fiscal year commencing on July 1, 2016, our sugarcane was reclassified to property, plant and
equipment, measured at cost and depreciated over its useful life on a straight-line basis. We adopted the transitional rule provided
for in the amendment, which allowed us to apply the fair value of bearer plants as their deemed cost as of July 1, 2014. Accordingly,
we revised the comparative financial data amounts for the years ended June 30, 2016 and 2015. Financial data for the year ended
June 30, 2014 has not been revised, and is not comparable to the financial data for the years ended June 30, 2018, 2017, 2016 and
2015.



|                                                                                              |  | Year ended June 30,                                    |           
|--------------------------------------------------------------------------------------------- |  | ------------------------------------------------------ | ----------
|                                                                                              |  | 2018                                                   |           
|                                                                                              |  | (R$ thousands, except share and per share information)
|CONSOLIDATED STATEMENT OF OPERATIONS                                                          |  |                                                        |           
|Net revenue                                                                                   |  |                                                        | 244,278   
|Gain on sale of farms                                                                         |  |                                                        | 39,817    
|Changes in fair value of biological assets and agricultural products                          |  |                                                        | 99,083    
|Adjustments to impairment of net realizable value of agricultural products after harvest, net |  |                                                        | 883       
|Cost of sales                                                                                 |  |                                                        | (228,319  
|Gross profit                                                                                  |  |                                                        | 155,742   
|Selling expenses                                                                              |  |                                                        | (10,087   
|General and administrative expenses                                                           |  |                                                        | (34,945   
|Other operating income (expenses) net                                                         |  |                                                        | 35,432    
|Share of profit (loss) of a joint venture                                                     |  |                                                        | 14,671    
|Operating income (loss)                                                                       |  |                                                        | 160,813   
|Financial income                                                                              |  |                                                        | 129,323   
|Financial expenses                                                                            |  |                                                        | (137,879  
|Financial (expense) income, net                                                               |  |                                                        | (8,566    
|Profit (loss) before income and social contribution taxes                                     |  |                                                        | 152,257   
|Income and social contribution taxes                                                          |  |                                                        | (25,919   
|Profit (loss) for the year                                                                    |  |                                                        | 126,338   
|Profit (loss) attributable to equity holders of the parent                                    |  |                                                        | 126,338   
|Issued shares at the fiscal year end                                                          |  |                                                        | 56,888,916
|Basic earnings (loss) per share                                                               |  |                                                        | 2.35      
|Diluted earnings (loss) per share                                                             |  |                                                        | 2.35      
|CONSOLIDATED CASH FLOW                                                                        |  |                                                        |           
|Net cash flows from (used in) operating activities                                            |  |                                                        | (2,264    
|Net cash flows (used in) from investing activities                                            |  |                                                        | (65,700   
|Net cash flows (used in) from financing activities                                            |  |                                                        | 125,414   
|Increase (decrease) in cash and cash equivalents                                              |  |                                                        | 57,450    



(*) 2014 figures have not
been revised to give effect to the adoption of the amendments of IAS 41 and IAS 16.



|                                              |  | Year ended June 30, |          
|--------------------------------------------- |  | ------------------- | ---------
|                                              |  | 2018                |          
|                                              |  | (R$ thousands)      |          
|CONSOLIDATED BALANCE SHEET                    |  |                     |          
|Assets                                        |  |                     |          
|Current assets                                |  |                     |          
|Cash and cash equivalents                     |  |                     | 104,314  
|Marketable securities                         |  |                     | 11,215   
|Accounts receivable and others                |  |                     | 95,176   
|Inventories                                   |  |                     | 69,622   
|Biological assets                             |  |                     | 61,993   
|Derivative financial instruments              |  |                     | 28,299   
|Transactions with related parties             |  |                     | 1,660    
|Total current assets                          |  |                     | 372,279  
|                                              |  |                     |          
|Non-current assets                            |  |                     |          
|Biological assets                             |  |                     | 34,053   
|Restricted marketable securities              |  |                     | 18,226   
|Transactions with related parties             |  |                     | —        
|                                              |  |                     |          
|Deferred taxes                                |  |                     | 32,742   
|Derivative financial instruments              |  |                     | 4,053    
|Accounts receivable and others                |  |                     | 74,775   
|Investment properties                         |  |                     | 557,152  
|                                              |  |                     |          
|Investments in unquoted equity instruments    |  |                     | 86       
|Property, plant and equipment                 |  |                     | 84,830   
|Intangible assets                             |  |                     | 1,403    
|Total non-current assets                      |  |                     | 807,320  
|Total assets                                  |  |                     | 1,179,599
|Liabilities and equity                        |  |                     |          
|Current liabilities                           |  |                     |          
|Trade accounts payable and others             |  |                     | 106,445  
|Loans and financing                           |  |                     | 70,088   
|Labor obligations                             |  |                     | 14,300   
|                                              |  |                     |          
|Derivative financial instruments              |  |                     | 10,489   
|Payables for purchase of farms                |  |                     | —        
|Transactions with related parties             |  |                     | 1,831    
|                                              |  |                     |          
|Total current liabilities                     |  |                     | 203,153  
|Non-current liabilities                       |  |                     |          
|Trade accounts payable and others             |  |                     | 11,298   
|Loans and financings                          |  |                     | 205,932  
|                                              |  |                     |          
|Derivative financial instruments              |  |                     | 2,145    
|Provision for legal claims                    |  |                     | 1,207    
|                                              |  |                     |          
|Total non-current liabilities                 |  |                     | 220,582  
|Equity                                        |  |                     |          
|Attributable to equity holders of the parent: |  |                     |          
|Capital                                       |  |                     | 584,224  
|Capital reserve                               |  |                     | 1,997    
|Income reserves                               |  |                     | 153,973  
|Treasury shares                               |  |                     | (35,208  
|Additional dividends proposed                 |  |                     | 10,995   
|Other comprehensive income (loss)             |  |                     | 39,883   
|                                              |  |                     |          
|                                              |  |                     | 755,864  
|Non-controlling interests                     |  |                     |          
|                                              |  |                     | 755,864  
|Total liabilities and equity                  |  |                     | 1,179,599



(*) 2014 figures have not been revised to give effect
to the adoption of the amendments of IAS 41 and IAS 16.



We
have included information with respect to dividends and/or interest on shareholders’ equity paid to holders of our common
shares since the fiscal year ended June 30, 2014 in Reais and in U.S. dollars translated from Reais at the commercial
market selling rate in effect as of the payment date under the caption “Item 8—Financial Information—Dividends
and Dividend Policy—Recent Dividend Payments.”



5







Exchange Rates



Our
dividends, when paid in cash, are denominated in Reais. As a result, exchange rate fluctuations have affected and will affect
the U.S. dollar amounts received by holders of ADSs on conversion of such dividends by The Bank of New York, as the ADS depositary.
The Bank of New York converts dividends it receives from Reaisinto U.S. dollars upon receipt, by sale or such other manner
as it has determined, and distributes such U.S. dollars to holders of ADSs, net of The Bank of New York’s expenses of conversion,
any applicable taxes and other governmental charges. Exchange rate fluctuations may also affect the U.S. dollar price of the ADSs.



The
Brazilian government may impose temporary restrictions on the conversion of Reaisinto foreign currencies and on the remittance
to foreign investors of proceeds from their investments in Brazil. Brazilian law permits the government to impose these restrictions
whenever it determines there is an imbalance in Brazil’s balance of payments or reason to expect that one will occur.



The
following tables show, for the periods and dates indicated, certain information regarding the Real/U.S. dollar exchange
rate. On June 30, 2018, the Real/U.S. dollar exchange rate was R$3.8552 per US$1.00. On September 30, 2018, the Real/U.S.
dollar exchange rate was R$4.0033 per US$1.00 and, on October 25, 2018, the selling rate was R$3.7014 to US$1.00. The information
below is based on the noon buying rate in the City of New York for wire transfers in Brazilian Reaisas certified for U.S.
customs purposes by the Federal Reserve Bank of New York.



|Year ended June 30, |  |  | Average Rate(1)  |      
|------------------- |  |  | ---------------- | -----
|                    |  |  | (R$ per US$1.00) |      
|2014                |  |  |                  | 2.297
|2015                |  |  |                  | 2.678
|2016                |  |  |                  | 3.695
|2017                |  |  |                  | 3.225
|2018                |  |  |                  | 3.314










(1) The average rate is calculated as the average of the noon
buying rates on the last day of each month during each twelve-month period ending on June 30 of each of the years indicated.



|Period                            |  | High             |        |  | Low | 
|--------------------------------- |  | ---------------- | ------ |  | --- | 
|                                  |  | (R$ per US$1.00) |       
|April 2018                        |  |                  | 3.5034 |  |     | 
|May 2018                          |  |                  | 3.7497 |  |     | 
|June 2018                         |  |                  | 3.8994 |  |     | 
|July 2018                         |  |                  | 3.9258 |  |     | 
|August 2018                       |  |                  | 4.1806 |  |     | 
|September 2018                    |  |                  | 4.1873 |  |     | 
|October 2018 (through October 25) |  |                  | 4.0273 |  |     | 



| | B. | Capitalization and Indebtedness
| | -- | -------------------------------



Not applicable.



| | C. | Reasons for the offer and use of proceeds
| | -- | -----------------------------------------



Not applicable.





6









| | D. | Risk Factors
| | -- | ------------



Risks
Relating to our Business and Industry



Our ability to implement our business strategy
successfully may be adversely affected by numerous factors beyond our control, which may materially and adversely affect our business,
financial condition and results of operations.



Our
business strategy depends on our ability to acquire, develop, operate and sell our agricultural properties on a profitable basis.
Our strategy is based on our ability to acquire agricultural properties at attractive prices, develop them into efficient and profitable
operations and sell them at a profit in the medium and long term. These factors are essential for our prospects of success, but
are subject to significant uncertainties, contingencies and risks within our economic, competitive, regulatory and operational
environment, many of which are beyond our control. Our ability to execute our business strategy successfully is uncertain and may
be adversely affected by any of the following factors:



| | ● | failure to acquire and sell agricultural properties at attractive prices;
| | - | -------------------------------------------------------------------------



| | ● | changes in market conditions or failure to anticipate and adapt to new trends in Brazil’s rapidly evolving agricultural
real estate sector;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | ● | inability to overcome certain limitations on the acquisition of land in Brazil by foreigners, as provided in the opinion of
the Federal Attorney General, as further detailed in this annual report;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | failure to expand our operations within the originally proposed time frame;
| | - | ---------------------------------------------------------------------------



| | ● | failure to maintain the fiscal structure of our subsidiaries;
| | - | -------------------------------------------------------------



| | ● | inability to develop infrastructure and attract personnel in a timely and effective manner;
| | - | -------------------------------------------------------------------------------------------



| | ● | inability to identify service providers for our agricultural properties and projects;
| | - | -------------------------------------------------------------------------------------



| | ● | increased competition for suitable land from other agricultural real estate owners or developers, which increases our costs
and adversely affects our profit margins;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | inability to develop and operate our agricultural properties profitably, which may result from inaccurate estimates regarding
the cost of infrastructure, other investments or operating costs;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | failure, delays or difficulties in obtaining necessary environmental and regulatory permits;
| | - | --------------------------------------------------------------------------------------------



| | ● | failure by purchasers of our properties to meet their payment obligations to us;
| | - | --------------------------------------------------------------------------------



| | ● | increased operating costs, including the need for improvements to fixed assets, insurance premiums and property and utility
taxes and fees that affect our profit margins;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | global climate conditions, such as global warming, which may contribute to the change of frequency of unpredictable or uncommon
meteorological phenomena such as hurricanes and typhoons, as well as unpredictable and unusual patterns of rainfall, among others;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | unfavorable climate conditions in Brazil, particularly in the regions where we carry out our activities;
| | - | --------------------------------------------------------------------------------------------------------



| | ● | the economic, political and business environment in Brazil, and specifically in the geographic regions where we invest and
operate;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | ● | inflation, fluctuating interest rates and exchange rates;
| | - | ---------------------------------------------------------



| | ● | disputes and litigation relating to our agricultural properties; and
| | - | --------------------------------------------------------------------



| | ● | labor, environmental, civil and pension liabilities.
| | - | ----------------------------------------------------



We may not be able to continue acquiring suitable
agricultural properties on attractive terms.



In
recent years, investments in Brazil’s agriculture sector have increased substantially. As a result, demand and valuations
for the kind of properties we seek to acquire have escalated significantly. We believe that prices for such properties are likely
to continue to increase in the medium and long-term, perhaps significantly as demand is expected to remain high. We compete with
local and foreign investors, many of whom are larger and have greater financial resources than we do. Such investors may be able
to incur operating losses for a sustained period, retain their real estate investments for a longer period than we can or accept
lower returns on such investments. As a result, such investors may be willing to pay substantially higher prices for agricultural
properties than we are able or willing to, depriving us of opportunities to acquire the best agricultural properties and/or increasing
our acquisition costs. As a result of the foregoing, we cannot assure you that we will be able to locate and acquire suitable investments
on reasonable terms or at all, and our inability to do so would have a material adverse effect on us.



The imposition of restrictions on acquisitions
of agricultural properties by foreign nationals may materially restrict the development of our business.



In August 2010,
the then-president of Brazil approved the opinion of the Federal Attorney General affirming the constitutionality of Brazilian
Law No. 5,709/71, which imposes important limitations on the acquisition and lease of land in Brazil by foreigners and by Brazilian
companies controlled by foreigners. Pursuant to this legislation, companies that are majority-owned by foreigners are not permitted
to acquire agricultural properties in excess of 100 indefinite exploration modules, or MEI (which are measurement units adopted
by the National Institute of Agrarian Development (Instituto Nacional de Colonização e Reforma Agrária,
or INCRA), within different Brazilian regions, and which range from five to 100 hectares) absent the prior approval of the Brazilian
Congress, while the acquisition of areas measuring less than 100 MEIs by such companies requires the prior approval of INCRA. In
addition, agricultural areas that are owned by foreigners or companies controlled by foreigners shall not exceed 25% of the surface
area of the relevant municipality, of which area up to 40% shall not belong to foreigners or companies controlled by foreigners
of the same nationality, meaning that the sum of agricultural areas that belong to foreigners or companies controlled by foreigners
of the same nationality shall not exceed 10% of the surface area of the relevant municipality. In addition, INCRA is also required
to verify if the agricultural, cattle-raising, industrial or colonization projects to be developed in such areas were previously
approved by the relevant authorities. After that analysis, INCRA will issue a certificate allowing the acquisition or rural lease
of the property. The purchase and/or rural lease of agricultural properties that do not comply with the aforementioned requirements
need to be authorized by the Brazilian Congress. In both cases, it is not possible to determine an estimated time frame for the
approval procedure, since at the date of this annual report, there are no known cases on the grating of such certificates.





7









On
September 30, 2018, approximately 78% of our common shares were held by foreigners. Bearing that in mind, the implementation of
Law No. 5,709/71 may impose on us additional procedures and approvals in connection with our future acquisitions of land, which
may result in material delays and/or our inability to obtain required approvals. There is also a case pending on the Supreme Court
(Supremo Tribunal Federal, or STF) on the Opinion No. 461/2012-E, issued by São Paulo’s General Controller
of Justice (Corregedoria Geral de Justiça do Estado de São Paulo), which has established that entities providing
notary and registrar services located in the State of São Paulo are exempt from observing certain restrictions and requirements
imposed by Law No. 5,709/71 and Decree No. 74,965/74. Moreover, on April 16, 2015, the Brazilian Rural Society filed a claim for
the acknowledgment of non-compliance with basic principles (ADPF) under certain provisions of the Brazilian Constitution with the
Supreme Court in order to (i) rule that paragraph 1, article 1, of Law No. 5,709/71 was repealed by the 1988 Federal Constitution
and (ii) reverse the opinion issued by the Federal Attorney General (AGU) of 2010. As of the date hereof, we are not able to provide
an estimate of the timeframe for a final judgment to be issued by the STF in both cases.



Depending
on the final decisions of these pending lawsuits, we may need to modify our business strategy and intended practices in order to
be able to acquire agricultural properties. For example, we currently have control over the properties we own, and we would need
to acquire more properties in partnership with local companies in which we relinquish our right to exercise control over the entities
acquiring such properties. This might have the effect of increasing the number of transactions we must complete, which would increase
our transaction costs. It might also require the execution of joint ventures or shareholder agreements, which increases the complexity
and risks associated with such transactions.



Any
regulatory limitations and restrictions could materially limit our ability to acquire agricultural properties, increase the investments,
transaction costs or complexity of such transactions, or complicate the regulatory procedures required, any of which could materially
and adversely affect us and our ability to successfully implement our business strategy. For more information, see “Item
4—Information on the Company—Business Overview—Ownership of Agricultural Land in Brazil by Foreigners.”



A substantial portion of our assets consist
of agricultural properties that are illiquid.



Our
business strategy is based on the appreciation of the capital invested in our agricultural properties and the liquidity of those
investments. We cannot assure you that the value of our agricultural properties will increase in the short-, medium- or long-term,
or at all, or that we will be able to monetize our agricultural investments successfully. Agricultural real estate assets are,
as a general rule, illiquid and volatile, and agricultural properties in Brazil are especially illiquid and volatile. As a result,
it may be difficult for us to promptly adjust our portfolio of properties in response to changes in economic or business conditions,
and we may be unable to find purchasers willing to acquire our agricultural properties at prices that are favorable to us. Lack
of liquidity and volatility in local market conditions would adversely affect our ability to carry out sales of properties on a
timely and profitable basis, which could have a material adverse effect on us.



We may not be profitable, or our cash flow
may not be positive for a number of years.



We
expect to incur significant capital and operating expenses for several years on account of our continuing development activities.
Due to the capital-intensive and long-term nature of our real estate development activities, many of our properties will not generate
immediate cash flows or provide a short-term return on investment. Therefore, we may not achieve positive cash flows or profitability
for a number of years, and, even if we do, we cannot assure you that such positive cash flows or profitability will be sustained
in the future. Should we fail to achieve and sustain profitability, our business, financial condition and results of operations
and the market value of our common shares would be adversely affected.



Fluctuation in market prices for our agricultural
products could adversely affect us.



We are
not able to obtain hedging protection or minimum price guarantees for the entirety of our production and therefore we are exposed
to significant risks associated with the level and volatility of crop prices. The prices we are able to obtain for our agricultural
products from time to time will depend on many factors beyond our control, including:



| | ● | global commodity prices, which historically have been subject to significant fluctuations over relatively short periods of
time, depending on worldwide supply and demand as well as speculation;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | weather conditions, or natural disasters in areas where agricultural products are cultivated;
| | - | ---------------------------------------------------------------------------------------------



| | ● | worldwide inventory levels (i.e., supply or stock of commodities carried over from year to year);
| | - | -------------------------------------------------------------------------------------------------



| | ● | the business strategies adopted by other major companies operating in the agricultural and agribusiness sectors;
| | - | ----------------------------------------------------------------------------------------------------------------



| | ● | changes in agriculture subsidies with regard to certain important producers (mainly in the United States and the European Economic
Community), trade barriers with regard to certain important consumer markets and the adoption of other government policies affecting
market conditions and prices;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | available transportation methods and infrastructure development in the regions where we operate or in remote areas serving
local markets and which affect the local prices of our crops; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | cost of raw materials; and supply of and demand for competing commodities and substitutes.
| | - | ------------------------------------------------------------------------------------------



In addition, we believe
there is a close relationship between the value of our agricultural properties and market prices of the commodities we produce,
which are affected by global economic and other conditions. A decline in the prices of grains, sugar or related by-products below
their current levels for a sustained period of time would significantly reduce the value of our land holdings and materially and
adversely affect our business, financial condition and results of operations.





8









Substantially all of our revenue is derived
from a small number of clients, and we currently face a risk of default by our main customer.



We
currently sell a substantial portion of our total crop production to a small number of clients who have substantial bargaining
power. For instance, during the year ended June 30, 2018, our two largest customers accounted for 58.1% of our total revenue, and
our three largest customers represented 69.3% of our total revenue. In the year ended June 30, 2018, five of our customers were
responsible for 80.8% of our revenue, and each of these five customers was responsible for at least 10% of our revenue. Of these
five customers, two were responsible for 100% of our revenue in the sugarcane segment, and three were responsible for 55.6% of
our revenue in the grains segment. In the year ended June 30, 2017, five of our customers were responsible for 78.3% of our revenue,
and each of these five customers was responsible for at least 10% of our revenue. Of these five customers, two were responsible
for 100% of our revenue in the sugarcane segment, and three were responsible for 56.9% of our revenue in the grains segment. See
Note 18 to our financial statements included elsewhere in this annual report.



Furthermore,
we entered into a supply contract and a leasing contract with Brenco – Companhia Brasileira de Energia Renovável (“Brenco”),
controlled by Odebrecht S.A., pursuant to which we currently supply them with 100% of our sugarcane production from Alto Taquari,
Araucaria and Partnership III farms. The term of this supply contract covers two full crop cycles, which consists of six crop years
and five harvests, and therefore is scheduled to expire in crop year 2021/2022. The term of this leasing contract covers a total
area of 5,782 hectares, which we will explore and operate until March 31, 2026.



In
addition, we entered into a supply contract and a leasing contract with Agro Pecuária e Industrial Serra Grande Ltda. (“Agro
Serra”), pursuant to which we currently supply them with 100% of our sugarcane production from São José farm.
The term of this supply contract covers at least 15 crop years, and therefore is scheduled to expire no earlier than in crop year
2032/2033, and encompasses a total area of 14,900 hectares, which we will explore and operate.



On
August 28, 2018, we also entered into an agricultural rural partnership agreement with 3SB Produtos Agrícolas S.A., for the lease of 11 rural properties (Fazenda Copacabana, Fazenda Dallas, Fazenda Ipanema, Jataí
II, Fazenda Princesa, Fazenda Mama, Fazenda Santa Luzia, Fazendas Santa Olimpia, Santa Terezinha and Rubi, Fazenda Santa Olimpia
2 and Fazenda Mata Fresca) located in the Municipalities of São Felix do Araguaia, in the State of Mato Grosso, with a total
agricultural area of 23,568 useful hectares, for a period of up to ten years.



In
addition, the strong competition between a relatively fragmented sector of agricultural producers in the internal and external
markets further increases the bargaining power of our highly concentrated client base. Thus, we may not be able to maintain or
form new relationships with customers, which could have a material adverse effect on our business, financial condition and results
of operations.



Concentration
among our client base also increases the adverse consequences to us should we lose any of our clients or if any of our clients
default on their obligations to us, either in the form of non-payment or through a breach of any contractual provision or obligation,
such as shipping failure or delays. Delays in the shipment of our products could directly affect the planning of our harvest, which
could generate losses and result in additional costs to us.



In
the year ended June 30, 2018 and as of the date hereof Brenco (ETH Bioenergia) has not defaulted on the payment of any receivable.
However, we currently run the risk of default by Brenco, our main customer, due to the fact that its controlling shareholder, Odebrecht
S.A., is being investigated for corruption in the operation called “Lava Jato” (Car Wash). Odebrecht’s CEO has
been arrested and the company has been facing the following issues: difficulties to access the credit market, decrease in its business
activities, acceleration of debts, among others. Please see “Item 4—Information on the Company—Business Overview—Agricultural
Activities and Products—Sugarcane” for a table presenting the aging of receivables from Brenco (ETH Energia). Therefore,
Brenco’s controlling shareholder has been cutting costs, which can adversely affect Brenco, its business and its ability
to meet its payments due to us.



We are dependent on third-party service providers
and subject to recent changes in the Brazilian labor legal framework.



In
addition to our own personnel, we are highly dependent on third-party contractors to develop and cultivate our agricultural properties,
and to provide the machinery and equipment needed for such purposes. As a result, our future success depends on the skill, experience,
knowledge and efforts of our third-party service providers. We cannot assure you that we will be able to hire the desired third-party
service providers for our agricultural properties or that such providers will have the ability to ensure quality agricultural production
in an efficient manner, and at competitive prices. Our failure to hire the desired service providers for our agricultural properties,
or their failure to provide quality services, or the revocation or termination or our failure to renew our service contracts or
negotiate new contracts with other service providers at comparable prices and terms would adversely affect us.



Our
dependence on third-party contractors also subjects us to the risk of labor lawsuits alleging that an employment relationship exists
between us and our contractors’ personnel, and that as a result we have joint and several or secondary liability for our
contractors’ labor and social security payment obligations, lease payments or other obligations. Such lawsuits could be brought
independently by such third-party employees, or could arise as a result of inspections by governmental authorities.



Despite
different interpretations by courts and scholars, in the past, the Brazilian Supreme Labor Court (Tribunal Superior do Trabalho)
had an understanding that outsourcing was legally permissible with respect to specialized services not related to the company’s
core business, such that an employment relationship is not formed between the outsourcer and the workers providing the non-core
services. In addition, pursuant to the aforementioned court’s decision, companies hiring third-party contractors in violation
of such standard would be held secondarily liable for labor and social security contingent liabilities of the employees of such
third-party contractors.



Without
prejudice to the foregoing, in 2017 the Brazilian Senate approved Law No. 13,467/17 (the “New Labor Law”) to amend
the Brazilian Labor Code (Consolidação das Leis do Trabalho, or CLT) and related regulations thereunder, thereby
governing the provision of outsourced services (“terceirização”), allowing the outsourcing of
core business activities. The New Labor Law currently allows outsourcing of any kind of labor, central or otherwise to the company’s
services (both the so-called “supporting activities,” as well as the “leading activities”). In August 2018,
the Brazilian Federal Supreme Court decided, by majority vote, that the outsourcing of services is permitted by Brazil’s
Federal Constitution and, therefore, confirmed the constitutionality of the relevant provisions of the New Labor Law, which was
fiercely opposed by labor unions. Legal scholars and case law now support the view that this recent decision of the Brazilian Supreme
Court resolves pending issues relating to the constitutionality of the New Labor Law, which is now interpreted to allow unrestricted
outsourcing.





9









The
New Labor Law also brought changes regarding prevalence of collective bargaining agreements, amendments to temporary workers’
rights, and changes to the rules of temporary contracts, among others.



We
may be required to adapt our current outsourcing strategy with regard to the use of third-party service providers and, in a worst-case
scenario, acknowledge the existence of an employment relationship between us and the employees of our third-party service providers.
The enactment of the New Labor Law may, therefore, have adverse effects on our business, financial condition and results of operations.



Moreover,
pursuant to Brazilian environmental law, we are jointly and severally liable, together with our contractors, for all environmental
damage caused by our third-party contractors, irrespective of our fault. Such obligations or our costs for defending against any
such claims may be significant and could have a material adverse effect on us if we were held liable.



Changes in government policies involving biofuels
may adversely affect our business, financial condition and results of operations.



Government
policies for encouraging biofuels as a response to environmental concerns have had, and are likely to continue to have, an impact
on grain prices. The nature and scope of future legislation and regulations affecting our markets are unpredictable, and we cannot
assure you that current concessions, prices or market protections involving biofuels will be maintained in their current form for
any period of time. Any change in the support afforded to biofuels by the United States government or any other government may
result in stagnation or decline in the market prices of certain agricultural commodities and consequently the price of our agricultural
properties, which may adversely affect our business, financial condition and results of operations.



We are subject to extensive environmental regulation.



Our
business activities in Brazil are subject to extensive federal, state and municipal laws and regulations concerning environmental
protection, which impose on us various environmental obligations, such as environmental licensing requirements, minimum standards
for the release of effluents, use of agrochemicals, management of solid waste, protection of certain areas (legal reserve and permanent
preservation areas), and the need for a special authorization to use water, among others. The failure to comply with such laws
and regulations may subject the violator to administrative fines, mandatory interruption of activities and criminal sanctions,
in addition to the obligation to rectify damages and pay environmental and third-party damage compensation, without any caps. In
addition, Brazilian environmental law adopts a joint and several and strict liability system for environmental damages, which makes
the polluter liable even in cases where it is not negligent and would render us jointly and severally liable for the obligations
of our contractors, producers or off-takers. If we become subject to environmental liabilities, any costs we may incur to rectify
possible environmental damage would lead to a reduction in our financial resources, which would otherwise remain at our disposal
for current or future strategic investment, thus causing an adverse impact on our business, financial condition and results of
operations.



As
environmental laws and their enforcement become increasingly stricter, our expenses for complying with environmental requirements
are likely to increase in the future. Furthermore, the possible implementation of new regulations, changes in existing regulations
or the adoption of other measures could cause the amount and frequency of our expenditures on environmental preservation to vary
significantly compared to present estimates or historical costs. Any unplanned future expenses could force us to reduce or forego
strategic investments and as a result could materially and adversely affect our business, financial condition and results of operations.



If we fail to innovate and utilize modern agricultural
technologies and techniques to enhance production and yields of our acquired agricultural properties, we may be adversely affected.



Our
business model is focused on our acquiring underdeveloped or underutilized agricultural properties and improving them by applying
evolving agricultural technologies and techniques. Therefore, our strategy depends to a large extent on our ability to obtain and
apply modern agricultural techniques and technologies to enhance the value of the properties we acquire. If we are unable to apply
in a timely manner the most advanced technologies and farming techniques required to add value to our agricultural properties and
make our products competitive and attractive to local and international investors, our business, financial condition and results
of operations would be adversely affected.



We may experience difficulties implementing
our investment projects, which may affect our growth.



Part
of our strategy with regard to our agricultural properties consists of investing in support infrastructure in order to increase
the value of such agricultural properties. In implementing our investment projects, we may face a number of challenges, including:
(i) failures or delays in acquiring necessary equipment or services; (ii) higher costs than those originally estimated; (iii) difficulties
securing the necessary environmental and government licenses; (iv) changes in market conditions, which could render the projects
less profitable than originally estimated; (v) impossibility or delays in acquiring land at attractive prices, or an increase in
the land prices on account of growing demand for land by our competitors; (vi) impossibility of, and delay in identifying and acquiring
land that is in compliance with Brazilian real estate property laws; (vii) lack of capacity to develop infrastructure and attract
qualified labor on a timely and efficient basis; (viii) disputes and litigation relating to the land we acquire; (ix) cultural
challenges deriving from the integration of new management and employees in our organization; and (x) the need to update accounting
systems, administrative data and human resources. Our inability to manage these risks would adversely affect us.



Property values in Brazil could decline significantly.



Property
values in Brazil are influenced by a wide variety of factors beyond our control, and therefore we cannot assure you that property
values will continue to increase or that property values will not decline. A significant decline in property values in Brazil could
adversely affect the value of our property holdings.



Our growth depends on our ability to attract
and retain qualified personnel.



We
are highly dependent on the services of our technical and administrative staff. If we lose any of our senior management, or require
additional management personnel, we will have to attract similarly qualified administrative and technical personnel. There is significant
demand for high-level, technical personnel with the skills and know-how required to operate our business, and we compete for this
talent in the global market. The availability of attractive opportunities in Brazil and other countries may adversely affect our
ability to hire or retain highly-qualified personnel. If we fail to attract and retain the professionals we need to expand and
manage our operations, our business may be materially and adversely affected.





10









Adverse
weather conditions may have an adverse impact on our agricultural properties and products and, to a lesser extent, our cattle
production.



The
occurrence of severe weather conditions, including droughts, floods, heavy rainfall, hail, frost or extremely high temperatures
is unpredictable and has had and could have in the future a potentially devastating impact on our agricultural properties or production
and, to a lesser extent, our cattle production. Adverse weather conditions may be exacerbated by the effects of climate change.
In recent years, different regions in Brazil have been affected by extreme weather conditions, and the regions where our properties
are located have also experienced high temperatures and severe drought in recent years. The effect of severe weather conditions
may materially reduce the productivity of our farms, impairing our revenue and cash flow, and requiring higher levels of investment
or significant increases in our operating costs, any of which could have a material and adverse impact on us.



Diseases may affect our crops and cattle, potentially
destroying all or part of our production.



The
occurrence and effect of diseases can be unpredictable and devastating on crops, potentially rendering useless all or a significant
portion of the affected crops. The cost of preventing and treating crop disease tends to be high. For example, diseases, such as
Asian soybean rust (Phakopsora pachyrhizi) and pests, like corn earworm (Helicoverpa zea) and cotton bollworm (Helicoverpa
armigera), can spread and may result in lower crop yields and higher operating costs. Currently, Asian soybean rust, corn earworm
and cotton bollworm can only be controlled, not eliminated.



Diseases
affecting our cattle herds, such as tuberculosis, brucellosis and foot-and-mouth disease, can render cows unable to produce meat
for human consumption. Outbreaks of cattle diseases may also result in the closure of certain important markets for our cattle
products, such as the United States. Although we abide by national veterinary health guidelines, which include laboratory analyses
and vaccination, to control diseases among the herds, especially foot-and-mouth disease, we cannot assure that future outbreaks
of cattle diseases will not occur. A future outbreak of diseases among our cattle herds may adversely affect our cattle sales which
could adversely affect our financial condition and results of operation.



The
origination and spread of diseases may occur for many reasons beyond our control, including the failure of other producers to comply
with applicable health and environmental regulations. The appearance of new diseases or the mutation or proliferation of existing
diseases could damage or completely destroy our crops and cattle herds, which would materially and adversely affect our business,
financial condition and results of operations.



Fires and other accidents may affect our agricultural
properties and adversely affect us.



Our operations are subject
to various risks affecting our agricultural properties and agricultural installations, including destruction of farms and crops
by fire and other natural disasters or events, and theft or other unexpected loss of grains or fertilizers and supplies. We could
be materially and adversely affected if any of these risks were to occur.



Widespread uncertainties and fraud involving
ownership of real estate in Brazil may adversely affect us.



Under
Brazilian law, ownership of real estate is conveyed only upon proper registration and filing of the relevant public deeds with
the Real Estate Registry Office with jurisdiction where the property is located. In certain locations in Brazil, it is frequent
to come across real estate registry errors, including duplicate or fraudulent certificates of enrollment and legal challenges.
Lawsuits concerning the lawful title of real estate are prevalent in Brazil and, as a result, there is a risk that such errors,
fraud or challenges adversely affect our business, financial condition and results of operations, thereby causing the loss of all
or substantially all of our agricultural properties.



We depend on international trade and economic
and other conditions in our key export markets.



Brazil’s
current agricultural production capacity is greater than the demands of its domestic agricultural market. Agriculture exports account
for an increasingly significant portion of our revenue, especially as our rehabilitated farm properties gain crop production capabilities
and increased yield. Therefore, our results of operations increasingly depend on political, economic and regulatory conditions
in our principal export markets. The ability of our products to effectively compete in these export markets may be adversely affected
by a number of factors beyond our control, including the deterioration of macroeconomic conditions, the volatility of exchange
rates, the imposition of tariffs or other trade barriers or other factors in those markets such as regulations relating to the
chemical content of agricultural products and safety and health regulations.



Due
to the growing market share of Brazilian agricultural and beef products in the international markets, Brazilian exporters are increasingly
being affected by tariffs and other barriers imposed by importing countries, in order to, among other things, protect local producers
by limiting access of Brazilian companies to their markets. For example, the European Union imposes protective tariffs designed
to mitigate the effects of Brazil’s lower production costs on local European producers. Developed countries also sometimes
use direct and indirect subsidies to enhance the competitiveness of their producers in other markets. The adoption of measures
by a given country or region, such as restrictions, import quotas or suspension of imports could substantially affect the export
volume of agricultural products and, consequently, our volume of exports and results of operations. If the competitiveness of our
products in one or more of our significant markets were to be affected by any one of these events, we may not be able to reallocate
our products to other markets on comparable terms, which could therefore adversely affect our business, financial condition and
results of operations.



Fluctuations in the value of the Real in relation
to the U.S. dollar could adversely affect us.



Foreign
exchange fluctuations, particularly of the Brazilian Realagainst the U.S. dollar, may significantly affect our results
of operations given that: (1) our products and the basic supplies used in our production are traded internationally; (2) soybean
prices are defined based on prices prevalent on the Chicago Board of Trade, or CBOT; and (3) most markets are served by several
suppliers from different countries, and competitiveness of farm products abroad may increase in relation to ours in light of the
appreciation of the Brazilian currency in relation to the U.S. dollar. Fluctuations in the value of the Realin relation
to the U.S. dollar could impact our export revenue, our sales in U.S. dollars in the Brazilian market and our financial expenses
and operating costs, which may adversely affect our business, financial condition and results of operations.



The
Real has suffered frequent depreciations and appreciations in relation to the U.S. dollar and other foreign currencies during
the past decade. The Brazilian government has in the past utilized different exchange rate regimes, including sudden devaluations,
periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual
exchange rate markets and a floating exchange rate system. Since 1999, Brazil has adopted a floating exchange rate system with
interventions by the Central Bank in buying or selling foreign currency. From time to time, there have been significant fluctuations
in the exchange rate between the Brazilian Realand the U.S. dollar and other currencies. The devaluations in more recent
time periods resulted in significant fluctuations in the exchange rates of the Realagainst the U.S. dollar and other currencies.





11









In
2015, the realdepreciated by 47.0% against the U.S. dollar, and on December 31, 2015, the Real/U.S. dollar exchange
rate was R$3.9048. In 2016, the Realappreciated by 16.3% against the U.S. dollar, and the Real/U.S. dollar exchange
rate was R$3.2591 on December 31, 2016. In 2017, the Real depreciated by 1.5% against the U.S. dollar, and the Real/U.S.
dollar exchange rate was R$ 3.3080 on December 31, 2017. On September 30, 2018, the Real/U.S.dollar exchange rate was R$4.0039
per US$1.00. There can be no assurance that the Realwill not depreciate or appreciate against the U.S. dollar in the future.



We
also hold derivative financial instruments to hedge risks relating to revenue from exports and operating costs denominated in foreign
currencies. If we fail to manage these instruments properly, we may be adversely affected by our exposure to these risks, which
may have a material adverse effect on our financial condition and results of operations.



Our business is seasonal, and our revenue may
fluctuate significantly depending on the growing cycle of our crops.



Agribusiness
operations are predominantly seasonal in nature. In Brazil, the harvest of soybean and corn generally occurs from February to June.
The annual sugarcane harvesting period in Brazil normally begins in April and ends in November. As a result, our results of operations
are likely to continue to significantly fluctuate between the planting and harvesting periods of each crop, which cause fluctuations
in our cash flows as a result of disparities between our revenue stream and our fixed expenses. In addition, seasonality creates
limited windows of opportunity for our producers to complete required tasks at each stage of crop cultivation. Should events such
as adverse weather conditions (including deluges of rain as has recently been the case throughout Brazil) or transportation interruptions
occur during these seasonal windows, we may face reduced revenue without an opportunity to recover until the following crop’s
planting. Finally, because of the effects of seasonality, our quarterly results may not be indicative of our annual results.



Our growth will require additional capital,
which may not be available on terms and conditions acceptable to us, or at all.



Our
operations require a significant amount of capital. We may need to seek additional capital by issuing shares or debt securities,
or by incurring indebtedness. Our ability to raise capital will depend on our future profitability, which is currently uncertain,
and on political and economic conditions in Brazil and the international agricultural and real estate markets. Depending on these
and other factors, many of which are beyond our control, additional capital may not be available at all or on conditions that are
favorable or acceptable to us. If we are required to finance our activities through indebtedness, it is likely that the terms of
that debt will impose upon us obligations or covenants, financial or otherwise, that could restrict our operational flexibility.
Should we fail to raise additional capital under conditions that are acceptable to us, our business, financial condition and results
of operations could be adversely affected.



We plan to continue to use financial derivative
instruments, which may result in substantial losses.



We
plan to continue to use derivative financial instruments, mainly commodity hedge derivatives, foreign exchange derivatives and
exchange rate swaps. If we enter into such hedging agreements and future prices of the underlying commodities differ from our expectations,
we may incur substantial losses which could have an adverse effect on our financial condition and results of operations.



Furthermore,
our hedging strategies may not properly take account of the effects of foreign exchange or commodity variations on our financial
position. On entering into forward exchange and commodity agreements, we will be subject to the risk that our counterparties could
fail to meet the conditions of such agreements. We may not be able to receive compensation for losses and damages from any defaulting
counterparty through legal remedies, on account of laws protecting against bankruptcy or other similar protections for insolvent
debtors, foreign laws restricting cross-border legal remedies, or for other reasons, which may adversely affect our business, financial
condition and results of operations.



We may not be successful in our future partnerships
and strategic relationships.



We
have entered into strategic partnerships and alliances in order to benefit from certain business opportunities. We cannot predict
if such strategic partnerships and alliances will be successful or if more partnerships and alliances will take place. Our ability
to successfully expand our business by means of strategic partnerships and alliances depends on various factors, including our
ability to negotiate favorable conditions for such partnerships and alliances, in addition to factors beyond our control, such
as our partners’ compliance with obligations arising from the partnership. Furthermore, our expectations regarding the benefits
of these partnerships may not materialize. If we are unable to develop successful strategic partnerships and alliances, we could
also be adversely affected.



Cresud, our controlling shareholder, and certain
members of our board of directors may have interests that differ from those of our other shareholders.



As
of September 30, 2018, Cresud holds 40.69% of our common shares. Cresud has other numerous investments and may have other priorities
that may conflict with those of our other shareholders, and as a result thereof, significant conflicts of interest may arise between
Cresud and our other shareholders. In addition, five of our nine directors have been nominated by Cresud and certain members of
our management, including our Chief Administrative Officer and Investor Relation Officer, were previously employed by Cresud. This
situation may give rise to actual or apparent conflicts of interest as such directors and officers may have fiduciary duties or
other interests owed to both us and Cresud or any of its affiliates. It may also limit the ability of such directors and officers
to participate in certain matters.



In
addition, as a result of Cresud’s ownership interest in us, conflicts of interest could arise with respect to transactions
involving our ongoing business activities, and the resolution of these conflicts may not be favorable to us. Specifically, business
opportunities, including but not limited to potential targets for rural property acquisitions, may be attractive to both Cresud
and us. We may not be able to resolve any potential conflicts and, even if we do so, the resolution may be less favorable to us
than if we were dealing with an unaffiliated party.



Increases in the price of raw materials and
oil may adversely affect us.



Our
agricultural properties are located in Brazil’s savannah region, a location where the soil is mostly acidic and not very
fertile, requiring the use of lime and fertilizers. Our operations require other raw materials such as pesticides and seeds which
we acquire from local and international suppliers. We do not have long-term supply contracts for these raw materials and therefore
are exposed to the risk of cost increases. A significant increase in the price of lime, fertilizers or other raw materials we use
would likely reduce our profitability or otherwise adversely affect our business operations as these are not costs that can readily
be passed on to our customers. In addition, certain of our production costs, including fertilizers and the cost of leasing agricultural
machinery, are linked to the international price of oil and its derivatives. Therefore, if the price of oil increases significantly,
our results of operations could be adversely affected.





12









Delays or failures in the delivery of raw materials
used by us and our suppliers could have an adverse effect on us.



We
depend on suppliers to provide us with fertilizers, seeds, other raw materials and machinery services. Possible delays in the delivery
of such items may delay our planting efforts until we are able to establish agreements with other suppliers, or may delay our harvest
in case of delay in delivery of machinery. Accordingly, any delays, failures or defects in the delivery of raw materials or inputs
or with regard to the provision of services to us by our suppliers could adversely affect our business and results of operations.
See “—Lack of transportation, storage and processing infrastructure in Brazil represents an important challenge for
the Brazilian agricultural and agricultural real estate sectors.”



Some of our agricultural products contain genetically
modified organisms (GMOs), and risks associated with GMOs remain uncertain.



The
totality of our products, including soybean and corn, contain genetically modified organisms, or GMOs in varying proportions depending
on the crop year. Production and consumption of GMOs remain controversial, and adverse publicity and consumer resistance have led
to the adoption of certain governmental regulations limiting sales of GMO products in important markets including the European
Union. If GMOs were determined to present risks to human health or to the environment, demand for our GMO products could collapse,
and we could face potentially significant liability for harm caused by such products, all of which could materially and adversely
affect our business, financial condition and results of operations.



Recently,
a Brazilian trial court ruled that new products containing “glyphosate” – a herbicide widely used in soybeans
and others crops – were prohibited from being registered in Brazil, and existing registrations would be suspended until the
government reevaluates their toxicity. This decision also suspended the registration of others chemicals, such as the insecticide
abamectin and the fungicide thiram. According to the Brazilian Agriculture Minister, this decision would be a disaster for the
agricultural industry and, for this reason, the decision was subject to multiple appeals. On September 3, 2018, a court of appeals
reversed the trial court’s decision. Currently, the use of glyphosate is permitted. However, we are unable to guarantee that
it will continue to be allowed.



The
prohibition of the use of glyphosate to control weed infestation could compromise no-till farming, which is important for productivity
and sustainability, and lead to increased use of other products for pest control. Currently, there is no alternative in Brazil
to replace glyphosate. Similar products have a high cost and are not readily available to meet the demand for glyphosate. As a
result, our production costs could increase, and our productivity could be significantly impacted, which could result in lower
production margins.



Lack of transportation, storage and processing
infrastructure in Brazil represents an important challenge for the Brazilian agricultural and agricultural real estate sectors.



We
depend on efficient access to transportation and port infrastructure for the growth of Brazilian agriculture in general, and our
operations in particular. We may decide to acquire agricultural properties in areas where existing transportation infrastructure
is inadequate and where improvements may be required to make our agricultural production more accessible to export centers at competitive
prices. A substantial portion of Brazilian agricultural production is currently transported by trucks, which is significantly more
expensive than transportation by rail cars. Given that our dependence on road transportation prevents us from being considered
a low-cost producer, our ability to compete on the world market may be impaired, especially as the price of fuel increases. As
a result, we may not be able to secure efficient transportation for our production to reach major markets in a cost-efficient manner
or at all, which may adversely affect our business, financial condition and results of operations.



In
addition, in May 2018, Brazil faced a widespread truck drivers’ strike, also called a diesel crisis, which caused a nationwide
transportation paralysis, highway blockades, cargo delays, shortages of food, supplies and fuel in Brazil. The strike was led by
self-employed truck drivers who demanded cuts in diesel fuel prices, fuel taxes, and reforms of laws and regulations applicable
to their occupation. The truckers’ strike forced the Brazilian government to make certain concessions, such as the expansion
of fuel subsidies, among others, in order to bring the strike to an end. The most significant concession made by the Brazilian
government was the introduction of a freight rate schedule providing for minimum freight rates and minimum rates per kilometer,
depending on the distance covered and type of cargo. The adoption of the freight rate schedule may increase transportation costs
in Brazil and, therefore, negatively impact the logistics sector as whole, and our business, financial condition and results of
operations.



Competition in the markets for our products
may affect us.



We
face significant domestic and international competition in each of our markets and in many of our production lines. The global
market for agricultural products is highly competitive and sensitive to changes in industrial capacity, product inventories and
cyclical changes in the world economy, any one or more of which may affect to a significant degree the selling price of our products
and therefore our profitability. Since many of our products are agricultural commodities, such products compete in international
markets almost exclusively based on price. Many other producers of such commodities are larger than us and possess greater financial
and other resources. Furthermore, many other producers receive subsidies in their respective countries that generally are not available
in Brazil. Such subsidies may afford producers lower production costs or enable them to operate in an environment with sharp price
reductions, constrained margins and operating losses for longer periods. Any increased competitive pressure with respect to our
products could materially and adversely affect our business, financial condition and results of operations.



Social movements may affect the use of our
agricultural properties or cause damage to them.



Social
movements such as the Landless Rural Workers’ Movement (Movimento dos Trabalhadores Rurais Sem Terra) and the
Pastoral Land Commission (Comissão Pastoral da Terra) are active in Brazil and advocate land reform and
property redistribution by the Brazilian government. Invasion and occupation of agricultural land by large numbers of people
is a common practice among the members of such movements and, in certain regions, including those where we currently invest,
remedies such as police protection or eviction procedures are inadequate or non-existent. As a result, we cannot assure you
that our agricultural properties will not be subject to invasion or occupation by any social movement. Any invasion or
occupation may materially impair the use of our lands and adversely affect our business, financial condition and results of
operations.





13









We made investments in farmland in Paraguay,
and we may possibly make investments in other countries in and outside Latin America, in which case we would be subject to the
associated economic, legal, political and regulatory risks.



Currently,
we conduct our activities in Brazil and Paraguay. We are considering expanding into other countries in and outside Latin America,
but currently have no definitive commitments or specific plans with respect thereto. In the future, we may expand our activities
into other countries in Latin America or elsewhere if we decide that international expansion would be appropriate to achieve our
objectives. The success in other countries of our business strategy and business model that we apply in Brazil would be subject
to a high level of uncertainty and depend on numerous factors beyond our control. Therefore, we cannot assure you that any such
expansion would be profitable or enable us to obtain the expected returns on our investments, or even recover our investments.
Any international expansion of our activities would be subject to political, economic and regulatory risks in the relevant country
and to risks inherent to the management of a transnational company, including:



| | ● | challenges posed by distance, language, local business practices and cultural differences (i.e. lack of financing; longer payment
cycles in the relevant country; difficulties in forming partnerships or strategic alliances with local parties; conflicting or
redundant practices in respect to tax, regulatory, legal and administrative aspects);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | negative effects of currency fluctuations or the imposition of exchange controls or restrictions on repatriation of capital;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | ● | adverse changes in laws and local policies, particularly those relating to import tariffs, labor practices, environment, investment,
acquisition of agricultural property by foreign companies or companies controlled by foreigners;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | difficulty of enforcement of contracts and collection or enforcement of debts, or difficulties or restrictions imposed by local
courts;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | ● | expropriation and imposition of legal or administrative limitations to the exercise of property rights as a result of changes
in laws or applicable regulations;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | difficulty in obtaining licenses, permits or other approvals from local government authorities;
| | - | -----------------------------------------------------------------------------------------------



| | ● | political disputes, social unrest and deteriorating local economic conditions;
| | - | ------------------------------------------------------------------------------



| | ● | transnational conflicts or disputes involving Brazil and the relevant country; and
| | - | ----------------------------------------------------------------------------------



| | ● | terrorism or military conflicts; and natural disasters, epidemics, riots and insurrections.
| | - | -------------------------------------------------------------------------------------------



Our inability to recognize
and respond to these differences, challenges and risks could adversely affect any operations we may undertake in markets outside
of Brazil, which could have a material adverse effect on our business, financial condition and results of operations.



Risks Relating to Brazil



The Brazilian government has exercised, and
continues to exercise, significant influence over the Brazilian economy, which, together with Brazilian political and economic
conditions, may adversely affect us.



We may be adversely affected by the following factors,
as well as the Brazilian federal government’s response to these factors:



| | ● | economic and social instability;
| | - | --------------------------------



| | ● | increase in interest rates;
| | - | ---------------------------



| | ● | exchange controls and restrictions on remittances abroad;
| | - | ---------------------------------------------------------



| | ● | restrictions and taxes on agricultural exports;
| | - | -----------------------------------------------



| | ● | exchange rate fluctuations;
| | - | ---------------------------



| | ● | inflation;
| | - | ----------



| | ● | volatility and liquidity in domestic capital and credit markets;
| | - | ----------------------------------------------------------------



| | ● | expansion or contraction of the Brazilian economy, as measured by GDP growth rates;
| | - | -----------------------------------------------------------------------------------



| | ● | allegations of corruption against political parties, elected officials or other public officials, including allegations made
in relation to the Lava Jato investigation;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | government policies related to our sector; and
| | - | ----------------------------------------------



| | ● | fiscal or monetary policy and amendments to tax legislation; and other political, diplomatic, social or economic developments
in or affecting Brazil.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



Historically,
the Brazilian government has frequently intervened in the Brazilian economy and has occasionally made significant changes in economic
policies and regulations, including, among others, the imposition of a tax on foreign capital entering Brazil (IOF tax), changes
in monetary, fiscal and tax policies, currency devaluations, capital controls and limits on imports.



The
Brazilian economy has been experiencing a slowdown – GDP growth rates were 3.9%, 1.8%, 2.7% and 0.1%, in 2011, 2012, 2013
and 2014, respectively, and GDP decreased 3.8% in 2015, 3.6% in 2016, increased 1.0% in 2017 and 1.8% in the first six months of
2018.



As
a result of investigations carried out in connection with the Lava Jato(Car Wash) operation into corruption in Brazil,
a number of senior politicians, including congressmen, and executive officers of some of the major state-owned companies in Brazil
have resigned or been arrested, while others are being investigated for allegations of unethical and illegal conduct. The matters
that have come, and may continue to come, to light as a result of, or in connection with, the Lava Jatooperation and other
similar operations have adversely affected, and we expect that they will continue to adversely affect, the Brazilian economy, markets
and trading prices of securities issued by Brazilian issuers in the near future.





14









The
ultimate outcome of these investigations is uncertain, but they have already had an adverse effect on the image and reputation
of the implicated companies, and on the general market perception of the Brazilian economy, the political environment and the Brazilian
capital markets. The development of these investigations has affected and may continue to adversely affect us. We cannot predict
if these investigations will bring further political or economic instability to Brazil, or if new allegations will be raised against
high-level members of the Brazilian federal government. In addition, we cannot predict the results of these investigations, nor
their effects on the Brazilian economy.



In
addition, on December 2, 2015, the Brazilian Congress opened impeachment proceedings against Brazilian President Dilma Rousseff
for allegedly breaking federal budget laws during her term. On August 31, 2016, following a trial by the Senate, President Dilma
Rousseff was impeached and Vice-President Michel Temer was sworn in as president. The president of Brazil has the power to determine
governmental policies and actions that relate to the Brazilian economy and, consequently, affect the operations and financial performance
of businesses including us. The impeachment proceedings have adversely affected and we expect that they will continue to adversely
affect the Brazilian markets and prices of securities issued by Brazilian issuers or subsidiaries of Brazilian companies. We cannot
predict the effects of the recent impeachment proceedings on the Brazilian economy. More recently, in May 2017, the development
of the investigations conducted by the Federal Police Department and the General Federal Prosecutor’s Office has increased
uncertainty with respect to the future prospects of the Brazilian markets. Furthermore, although the Brazilian Superior Electoral
Court (Tribunal Superior Eleitoral) in a 4 to 3 vote has recently acquitted Dilma Rousseff and Michel Temer of charges of
illegal campaign financing that could annul the presidential election that took place in 2014 and ultimately could require President
Michel Temer to vacate the presidential office, this decision may still be appealed to the Brazilian Supreme Court (Supremo
Tribunal Federal). In addition, a number of requests for impeachment have been filed against Mr. Temer, as well as criminal
charges by the Brazilian Federal Prosecutor’s Office, which could also result in his removal from office, after allegations
surfaced that Mr. Temer had allegedly been leading a political corruption related criminal organization. Furthermore, recently
a Brazilian federal appeals court unanimously upheld the conviction of former president Luís Inácio Lula da Silva
on corruption charges uncovered by the Lava Jato operation; however, this decision can still be appealed to the Brazilian Supreme
Court. On April 7, 2018, Luís Inácio Lula da Silva began his prison sentence. We cannot predict whether these investigations
and lawsuits as well as the imprisonment of Luís Inácio Lula da Silva will bring about further economic and political
instability or if new allegations against high officers of the Brazilian Federal Government will arise in the future. In addition,
we cannot predict the results of any such investigations, including their effects over the Brazilian economy. The development of
such cases may negatively affect us.



Also, in October 2018
general elections were held in Brazil for the election of its next president for a four-year term as well as for senators and federal
congressmen. The Brazilian economy and the Real exchange rate may be negatively affected depending on the policies adopted
and actions taken by the new administration.



Inflation, coupled with the Brazilian government’s
measures to fight inflation, may hinder Brazilian economic growth and increase interest rates, which could have a material adverse
effect on us.



Brazil
has in the past experienced significantly high rates of inflation. As a result, the Brazilian government adopted monetary policies
that resulted in Brazilian interest rates being among the highest in the world. The Central Bank’s Monetary Policy Committee
(Comitê de Política Monetária do Banco Central, or COPOM), establishes an official interest rate target
for the Brazilian financial system based on the level of economic growth, inflation rate and other economic indicators in Brazil.
Between 2004 and 2010, the official Brazilian interest rate varied from 19.75% to 8.75% per year. In response to an increase in
inflation in 2010, the Brazilian government increased the official Brazilian interest rate, the SELIC rate, which was 10.75% per
year as or December 31, 2010. The SELIC rate has increased and decreased since then and, as of June 30, 2018, it was 6.50% per
year. The inflation rates, as measured by the General Market Price Index (Índice Geral de Preços–Mercado,
or IGP-M), and calculated by Fundação Getúlio Vargas, or FGV, were 3.67% in 2014, 10.54% in 2015, 7.18%
in 2016 and (0.52)% in 2017. Cumulative inflation in the first six months of 2018, calculated by the same index, was 5.39%.



Inflation
and the government measures to fight inflation have had and may continue to have significant effects on the Brazilian economy and
our business. In addition, the Brazilian government’s measures to control inflation have often included maintaining a tight
monetary policy with high interest rates, thereby restricting the availability of credit and slowing economic growth. On the other
hand, an easing of monetary policies of the Brazilian government may trigger increases in inflation. In the event of an increase
in inflation, we may not be able to adjust our daily rates to offset the effects of inflation on our cost structure, which may
materially and adversely affect us.



An
increase in interest rates may have a significant adverse effect on us. In addition, as of June 30, 2018, certain of our loans
were subject to interest rate fluctuations, such as the Brazilian long-term interest rate (Taxa de Juros de Longo Prazo,
or TJLP), and the interbank deposit rate (Certificados de Depósitos Interbancários, or CDI). In the event
of an abrupt increase in interest rates, our ability to comply with our financial obligations may be materially and adversely affected.



A deterioration in general economic and market
conditions or the perception of risk in other countries, principally in emerging countries or the United States, may have a negative
impact on the Brazilian economy and us.



Economic
and market conditions in other countries, including United States and Latin American and other emerging market countries, may affect
the Brazilian economy and the market for securities issued by Brazilian companies. Although economic conditions in these countries
may differ significantly from those in Brazil, investors’ reactions to developments in these other countries may have an
adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging market countries could dampen investor
enthusiasm for securities of Brazilian issuers, including ours, which could adversely affect the market price of our common shares.
In the past, the adverse development of economic conditions in emerging markets resulted in a significant flow of funds out of
the country and a decrease in the quantity of foreign capital invested in Brazil. Changes in the prices of securities of public
companies, lack of available credit, reductions in spending, general slowdown of the global economy, exchange rate instability
and inflationary pressure may adversely affect, directly or indirectly, the Brazilian economy and securities market. Global economic
downturns and related instability in the international financial system have had, and may continue to have, a negative effect on
economic growth in Brazil. Global economic downturns reduce the availability of liquidity and credit to fund the continuation and
expansion of business operations worldwide.



In addition, the Brazilian
economy is affected by international economic and market conditions generally, especially economic conditions in the United States.
Share prices on B3 S.A. – Brasil, Bolsa, Balcão, or B3, for example, have historically been sensitive to fluctuations
in U.S. interest rates and the behavior of the major U.S. stock indexes. An increase in interest rates in other countries, especially
the United States, may reduce global liquidity and investors’ interest in the Brazilian capital markets, adversely affecting
the price of our common shares.





15









Risks Relating to our American Depositary Shares
and Common Shares



A holder of our American Depositary Shares
may face disadvantages compared to a holder of our common shares when attempting to exercise voting rights.



Holders
of our American Depositary Shares, or ADSs, may instruct the depositary to vote the common shares underlying the ADSs. For the
depositary to follow the voting instructions, it must receive them on or before the date specified in our voting materials. The
depositary must try, as far as practical, subject to Brazilian law and our articles of association, to vote the common shares as
instructed. In most cases, if the ADS holder does not give instructions to the depositary, it may vote the common shares in favor
of proposals supported by our board of directors, or, when practicable and permitted, give a discretionary proxy to a person designated
by us. We cannot be certain that ADS holders will receive voting materials in time to ensure that they can instruct the depositary
to vote the underlying common shares. Also, the depositary is not responsible for failing to carry out voting instructions or for
the manner of carrying out voting instructions. This means that ADS holders may not be able to exercise their right to vote and
there may be nothing they can do if their common shares or other deposited securities are not voted as requested.



Holders of our common shares or ADSs may not
receive any dividends or interest on shareholders’ equity.



According
to our bylaws, we must pay our shareholders at least 25% of our annual net income as dividends or interest on shareholders’
equity, as calculated and adjusted under Brazilian corporate law. This adjusted net income may be capitalized, used to absorb
losses or otherwise retained as allowed under Brazilian corporate law and may not be available to be paid as dividends or interest
on shareholders’ equity.



Additionally, Brazilian corporate law allows a publicly-traded company like ours to suspend the
mandatory distribution of dividends in any particular year if our board of directors informs our shareholders that such distributions
would be inadvisable in view of our financial condition or cash availability. Holders of our common shares or ADSs may not receive
any dividends or interest on shareholders’ equity in any given year if our board of directors makes such a determination
or if our operations fail to generate net income.



Holders of our common shares or ADSs in the
United States may not be entitled to the same preemptive rights as Brazilian shareholders, pursuant to Brazilian law, in the subscription
of shares resulting from capital increases made by us.



Under
Brazilian law, if we issue new shares in exchange for cash or assets as part of a capital increase, subject to certain exceptions,
we must grant our shareholders preemptive rights at the time of the subscription of shares, corresponding to their respective interest
in our share capital, allowing them to maintain their existing shareholding percentage. We may not legally be permitted to allow
holders of our common shares or ADSs in the United States to exercise any preemptive rights in any future capital increase unless
(i) we file a registration statement for an offering of shares resulting from the capital increase with the SEC, or (ii) the offering
of shares resulting from the capital increase qualifies for an exemption from the registration requirements of the Securities Act.
At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration
statement for an offering of shares with the SEC and any other factors that we consider important in determining whether to file
such a registration statement. We cannot assure the holders of our common shares or ADSs in the United States that we will file
a registration statement with the SEC to allow them to participate in any of our capital increases. As a result, the equity interest
of such holders in our company may be diluted.



If holders of our ADSs exchange them for common
shares, they may risk temporarily losing, or being limited in, the ability to remit foreign currency abroad and certain Brazilian
tax advantages.



The
Brazilian custodian for the common shares underlying our ADSs must obtain an electronic registration number with the Central Bank
to allow the depositary to remit U.S. dollars abroad. ADS holders benefit from the electronic certificate of foreign capital registration
from the Central Bank obtained by the custodian for the depositary, which permits it to convert dividends and other distributions
with respect to the common shares into U.S. dollars and remit the proceeds of such conversion abroad. If holders of our ADSs decide
to exchange them for the underlying common shares, they will only be entitled to rely on the custodian’s certificate of registration
with the Central Bank for five business days after the date of the exchange. Thereafter, they will be unable to remit U.S. dollars
abroad unless they obtain a new electronic certificate of foreign capital registration in connection with the common shares, which
may result in expenses and may cause delays in receiving distributions. See “Item 10—Additional Information—Exchange
Controls.”



Also,
if holders of our ADSs that exchange them for our common shares do not qualify under the foreign investment regulations, they will
generally be subject to less favorable tax treatment of dividends and distribution on, and the proceeds from any sale of, our common
shares. See “Item 10 —Additional Information—Exchange Controls” and “Item 10—Additional Information—Taxation—Brazilian
Tax Considerations.”



Holders of our ADSs may face difficulties in
protecting their interests because, as a Brazilian company, we are subject to different corporate rules and regulations and our
shareholders may have fewer and less well-defined rights.



Holders
of our ADSs are not direct shareholders of our company and are unable to enforce the rights of shareholders under our bylaws and
Brazilian corporate law.



Our
corporate affairs are governed by our bylaws and Brazilian corporate law, which differ from the requirements that would apply if
we were incorporated in a jurisdiction in the United States, such as the State of Delaware or New York, or elsewhere outside Brazil.
Even if a holder of our ADSs surrenders its ADSs and becomes a direct shareholder, its rights as a holder of our common shares
under Brazilian corporate law to protect its interests relative to actions by our board of directors may be fewer and less well-defined
than under the laws of those other jurisdictions.



Holders of our ADSs may face difficulties in
serving process on or enforcing judgments against us and other persons.



We
are organized under the laws of Brazil, and all of our executive officers and our independent registered public accountants reside
or are based in Brazil. The vast majority of our assets and those of these other persons are located in Brazil. As a result, it
may not be possible for holders of our ADSs to effect service of process upon us or these other persons within the United States
or other jurisdictions outside Brazil or to enforce against us or these other persons judgments obtained in the United States or
other jurisdictions outside Brazil. In addition, because substantially all of our assets and all of our directors and officers
reside outside the United States, any judgment obtained in the United States against us or any of our directors or officers may
not be collectible within the United States. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal
securities laws may only be enforced in Brazil if certain conditions are met, holders may face greater difficulties in protecting
their interests in the case of actions by us or our board of directors or executive officers than would shareholders of a U.S.
corporation.





16









In
addition, rules and policies against self-dealing or for preserving shareholder interests may be less well-defined and enforced
in Brazil than in the United States and certain other countries, which may put holders of our common shares and ADSs at a potential
disadvantage. Corporate disclosures also may be less complete or informative than those of a public company in the United States
or in certain other countries.



Our status as a foreign private issuer allows
us to follow local corporate governance practices, which may limit the protections afforded to investors.



We
are a foreign private issuer, as defined by the SEC for purposes of the Exchange Act. As a result, for so long as we remain a foreign
private issuer, we will be exempt from most of the corporate governance requirements of stock exchanges located in the United States;
accordingly, you will not be provided with the benefits or have the same protections afforded to shareholders of U.S. public companies.



The
standards applicable to us are considerably different from the standards applied to U.S. domestic issuers. Although Rule 10A-3
under the Exchange Act generally requires that a listed company have an audit committee of its board of directors composed solely
of independent directors, as a foreign private issuer, we are relying on a general exemption from this requirement that is available
to us as a result of the features of Brazilian law applicable to our fiscal council. In addition, we are not required to, among
other things:



| | ● | have a majority of the board be independent;
| | - | --------------------------------------------



| | ● | have a compensation committee or a nominating/corporate governance committee of our board of directors; and
| | - | -----------------------------------------------------------------------------------------------------------



| | ● | have regularly scheduled executive sessions with only non-management directors; or have at least one executive session of solely
independent directors each year.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



We are an emerging growth company within the
meaning of the Exchange Act and, if we decide to take advantage of certain exemptions from various reporting requirements applicable
to emerging growth companies, our common stock could be less attractive to investors.



We
are an “emerging growth company” within the meaning of the rules under the Exchange Act. We are eligible to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies, including, but not limited to, not being required to comply with any PCAOB rules, that, if adopted in the future,
would require mandatory audit firm rotation and auditor discussion and analysis pursuant to any future audit rule promulgated
by the PCAOB (unless the U.S. Securities and Exchange Commission, or the SEC, determines otherwise). In addition, we are not subject
to the additional level of review of our internal control over financial reporting as may occur when outside auditors attest as
to our internal control over financial reporting. As a result, our stockholders may not have access to certain information they
may deem important. We will remain an emerging growth company for up to five years from the date of our initial public offering
of securities under an effective registration statement under the Securities Act, though we may cease to be an emerging growth
company earlier under certain circumstances.



We take advantage of the exemption from the auditor attestation report requirement
and may decide to rely on other exemptions in the future. We do not know if some investors will find our common stock less attractive
as a result. The result may be a less active trading market for our common stock, and our stock price may be more volatile.



Brazilian tax laws may have an adverse impact
on the taxes applicable to the disposition of our common shares and ADSs.



Under Law No. 10,833/2003,
the gain on the disposition or sale of assets located in Brazil by a non-Brazilian resident, whether to another non-Brazilian resident
or to a Brazilian resident, may be subject to income tax withholding in Brazil. With respect to the disposition of our common shares,
as they are assets located in Brazil, a non-Brazilian resident should be subject to income tax on the gains assessed, regardless
of whether the transactions are conducted in Brazil or with a Brazilian resident. With respect to our ADSs, although the matter
is not entirely clear, arguably the gains realized by a non-Brazilian resident upon the disposition of ADSs to another non-Brazilian
resident will not be taxed in Brazil, on the basis that ADSs are not “assets located in Brazil” for the purposes of
Law No. 10,833/2003. We cannot assure you, however, that the Brazilian tax authorities or the Brazilian courts will agree with
this interpretation. As a result, gains on a disposition of ADSs by a non-Brazilian resident to a Brazilian resident, or even to
a non-Brazilian resident, in the event that courts determine that ADSs would constitute assets located in Brazil, may be subject
to income tax in Brazil. See “Item 10—Additional Information—Taxation—Brazilian Tax Considerations.”



The relative volatility and illiquidity of
the Brazilian securities markets may adversely affect holders of our common shares and ADSs.



The
Brazilian securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United
States. The B3, which is the principal Brazilian stock exchange, had a market capitalization of R$2.3 trillion (US$0.7 trillion),
as of December 31, 2017, and an average daily trading volume of R$9.7 billion (US$2.9 billion) in 2017. In comparison, the aggregate
market capitalization of the companies (including U.S. and non-U.S. companies) listed on the NYSE was US$27.8 trillion as of December
31, 2017, and the NYSE recorded an average daily trading volume of US$12.8 billion in 2017. There is also significantly greater
concentration in the Brazilian securities markets. The ten largest companies in terms of market capitalization represented approximately
71% of the aggregate market capitalization of the B3 as of December 31, 2017. The ten most widely traded stocks in terms of trading
volume accounted for approximately 39% of all shares traded on the B3 in 2017. These market characteristics may substantially limit
the ability of holders of our ADSs to sell the common shares underlying our ADSs at a price and at a time when they wish to do
so and, as a result, could negatively impact the market price of our ADSs themselves.



The imposition of IOF taxes may indirectly
influence the price and volatility of our ADSs and our common shares.



Brazilian
law imposes the Tax on Foreign Exchange Transactions, or the IOF/Exchange tax, on the conversion of Brazilian Reais into
foreign currency and on the conversion of foreign currency into Reais. Brazilian law also imposes the Tax on Transactions
Involving Bonds and Securities, or the IOF/Securities tax, due on transactions involving bonds and securities, including those
carried out on a Brazilian stock exchange.



The
IOF/Exchange tax was raised from zero to 6% on October 20, 2009. As of December 1, 2011, certain investments were excluded from
the 6% tax and subject instead to a 2% IOF/Exchange tax. In 2009, the IOF/Securities tax was increased from zero to 1.5% on shares
issued by a Brazilian company and listed on a Brazilian stock exchange for the purpose of allowing depositary receipts traded outside
Brazil to be issued. In 2011, the IOF/Securities tax was increased from zero to 1% on currency-related derivative transactions
resulting in an increase of the short position exposure in foreign currency or in a decrease of the long position in foreign currency.
Since June 30, 2013, the IOF/Exchange tax and the IOF/Securities tax rates have been zero.





17









The
imposition of these taxes may discourage foreign investment in shares of Brazilian companies, including our company, due to higher
transaction costs, and may negatively impact the price and volatility of our ADSs and common shares if they become listed on a
stock exchange in the United States, as well as on the B3.



We may be classified as a passive foreign investment
company, which could result in adverse U.S. tax consequences for U.S. investors.



We
may be classified as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes. Such characterization
could result in adverse U.S. tax consequences to you if you are a U.S. Holder (as defined in “Item 10—Additional Information—Taxation—U.S.
Federal Income Tax Considerations”) of our common shares or ADSs. For example, if we are a PFIC, U.S. Holders of our common
shares or ADSs may become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to burdensome
reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition
of our income and assets from time to time. Specifically, for any taxable year we will be classified as a PFIC for U.S. tax purposes
if either (i) 75% or more of our gross income in that taxable year is passive income or (ii) the average percentage of our assets
by value in that taxable year which produce or are held for the production of passive income is at least 50%. For this purpose,
income from commodities transactions is generally considered passive unless such income is derived in the active conduct of a commodities
business.



See
“Item 10—Additional Information—Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment
Company.”



ITEM
4—INFORMATION ON THE COMPANY



| | A. | History and Development of the Company Overview
| | -- | -----------------------------------------------



Our
legal and commercial name is BrasilAgro—Companhia Brasileira de Propriedades Agrícolas. We are a corporation (sociedade
por ações) organized under the laws of Brazil, and were incorporated on September 23, 2005. Our principal offices
are located at Avenida Brigadeiro Faria Lima, 1309, 5th floor, São Paulo, SP 0145-002, Brazil, and our telephone
number is +55 11 3035 5350.



We are focused on the
acquisition, development and exploration of agricultural properties that we believe possess significant potential for cash flow
generation and value appreciation. We seek to transform our acquired properties through investments in infrastructure and technologies
which permit cultivation of high value-added crops (soybean, corn, sugarcane and others) and cattle raising and from time to time
sell our developed properties in order to realize capital gains.



Since
our initial public equity offering and listing in Brazil on the B3 stock exchange in April 2006, or the IPO, and the subsequent
commencement of our operations until the date hereof, we acquired 12 agricultural properties in seven Brazilian states, aggregating
266,772 hectares, of which 172,032 hectares were arable but less than 10% of which were cultivated when acquired and 94,740 hectares
were protected by environmental regulation. Since then, four of our agricultural properties were fully sold and tree of our agricultural
properties were partly sold, representing in the aggregate a total area of 78,398 hectares. As of the date hereof, we hold 238,705
hectares, including 50,331 hectares leased.



In
December 2013, we acquired a 50% interest in Cresca S.A., a company that owns 141,931 hectares of rural land in Paraguay, of which
approximately 71,000 hectares were arable, but less than 12,000 hectares of which were cultivated when acquired, and approximately
70,931 were protected by environmental regulation. On October 5, 2016, we entered into an agreement with Carlos Casado S.A. (“Carlos
Casado”), our partner in Cresca at the time, pursuant to which we agreed to try to sell all the land that Cresca owned for
a 120-day period as of the execution date of the aforementioned agreement. Further to the provisions of the agreement, we and Carlos
Casado also agreed to split ownership of the land among us and Carlos Casado if either party failed to dispose of the totality
of the land within the 120-day period.



As
the properties were not sold to third-parties, on June 6 and June 8, 2017, we and Carlos Casado decided to proceed with the spin-off
of Cresca, whereby we would separate and divide the assets and liabilities of Cresca, and Cresca would distribute them to us and
to Carlos Casado. As a result of this transaction, we now have the following two subsidiaries that received Cresca’s assets
and liabilities: (i) Palmeiras S.A. (“Palmeiras”), which was incorporated on December 16, 2016 to operate the activities
of our investment in Cresca S.A. and (ii) Agropecuária Moroti S.A. (“Moroti”), a subsidiary that received, on
February 9, 2018, upon the conclusion of the formal spin-off process, all other assets and liabilities of Cresca attributed to
BrasilAgro, including land and debts.



On
February 9, 2018, the spin-off of Cresca was concluded and the portion of assets and liabilities attributed to us was transferred
to the wholly-owned subsidiary Moroti. As of June 30, 2018, Moroti owns 59,490 hectares of which 29,745 were arable.



We
invested more than R$738.7 million since the IPO to acquire, develop and transform agricultural properties.



We
will continue the investments to develop and transform our agricultural properties in Brazil and Paraguay. In this regard, we will
continue to apply for financing with government development banks.



From July 1, 2015 until the date hereof:



| | ● | on August 28, 2018, we leased an area of 23,568 hectares, located in the municipality of São
Félix do Araguaia, in the State of Mato Grosso. The new farm was named Partnership V. The lease agreement has a term of
up to 10 years and was followed market prices ​​practiced
in the region;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | during the 2017/2018 crop year, we developed 2,000 hectares of our 172,032 hectares of arable
land through the cultivation of soybeans and other value-added crops;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in July 2018, we sold an area of 9,784 hectares (7,485 arable hectares)
in the Jatobá farm, located in Jaborandi, State of Bahia. The total amount of the sale was 285 soybean bags per arable hectare,
or R$164.8 million (approximately R$22,018 per arable hectare);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





18









| | ● | in May 2018, we sold an area of 956 hectares (660 arable hectares) in the
Araucária farm, located in Mineiros, State of Goiás. The total amount of the sale was 1,208 soybean bags per arable
hectare, or R$52.4 million (approximately R$79,393 per arable hectare);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in May 2018, we issued Agribusiness Receivables Certificates (ARC) in the
aggregate amount of R$142.2 million. The ARCs are secured by debentures that were issued in two series, the first in the amount
of R$85.2 million, and the second in the amount of R$57 million. The first series of debentures will mature on August 1, 2022 and
be repaid in three annual installments starting on July 30, 2020, and accrue interest at 106.5% of the DI rate, payable on July
30 of each year. The second series of debentures will mature on July 31, 2023 and be repaid in four annual installments starting
on July 30, 2020, and accrue interest at 110.0% of the DI rate, payable on July 30 of each year;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | on February 9, 2018, the spin-off of Cresca was concluded and the portion
of assets and liabilities attributed to us was transferred to the wholly-owned subsidiary Moroti. As of June 30, 2018, Moroti owns
59,490 hectares of which 29,745 were arable;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in June 2017, we sold an area in the Jatobá Farm, a rural property
located in the State of Bahia. A total of 625 hectares (500 hectares of arable land) were sold, worth 300 soybean bags per hectare
of arable land or R$10.1 million (approximately R$20,180/ha);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in March 2017 and May 2017, we sold two areas in the Araucaria Farm, a rural
property located in the State of Goias. In March 2017, 274 hectares (200 hectares of arable land) were sold in the amount of 1,000
soybean bags per hectare of arable land or R$12.5 million (R$13.2 million nominal value/approximately R$66,227/ha). The second
area, sold in May 2017, totaled 1,360 hectares (918 hectares of arable land), worth 280 soybean bags per hectare or arable land
or R$17.0 million (approximately R$18,535/ha). It is important to highlight that this area includes a lowland area and, therefore,
the value of the sale per hectare of arable land is lower compared to the sale held in the same farm in March, which consisted
of a plateau area;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | we conducted a purchase and agricultural partnership for a property in state
of Maranhão, whereby we acquired 17,566 hectares, 10,137 hectares of arable land in February 2017, that has already been
developed, and will be used for the planting of grain crops. The other 7,566 hectares are permanent preservation and legal reserve
areas. The acquisition price is R$100.0 million (R$10 thousand/hectare of arable land) and the agricultural partnership consists
of 15,000 of arable and developed land, already planted mostly with sugarcane. The Agricultural Partnership has a term of 15 years,
which may be extended for the same period;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | during 2016/2017 crop year, we developed 5,117 hectares of our 199,114 hectares of arable land
through the cultivation of soybeans and other value-added crops;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | on October 5, 2016, we entered into an agreement with Carlos Casado, our partner in Cresca,
to try to sell all the land that Cresca owned or to split ownership of the land between us and Carlos Casado if a 120 day period
since execution of the agreement lapsed;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | during 2015/2016 crop year, we developed 6,572 hectares of our 163,431 hectares of arable land
through the cultivation of soybeans and other value-added crops;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | during 2015/2016 crop year, we began cattle-raising operations at the Preferência Farm,
in Bahia, initially consisting of breeding and fattening activities. We have acquired 4,836 head of cattle, which are distributed
over 5,052 hectares of already active pasture; and we entered into a partnership to explore an area of 4,263 hectares in the municipalities
of Alto Taquari and Alto Araguaia, in the State of Mato Grosso (“Partnership III”). These areas are close to Alto Taquari
farm and will be used for sugarcane by March 31, 2026.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The map below indicates
the location of our agricultural properties, their arable areas, their current or intended production activities and the sold areas
as of June 30, 2018:


















| | (1) | New social denomination of the operation in Paraguay.
| | --- | -----------------------------------------------------



| | (2) | BrasilAgro signed a partnership in “Partnership II Farm” for up to 11 crops and up to 10,000 hectares.
| | --- | ------------------------------------------------------------------------------------------------------



| | (3) | BrasilAgro signed a partnership in “Partnership III Farm,” which will expire on March 31, 2026.
| | --- | -----------------------------------------------------------------------------------------------



| | (4) | BrasilAgro signed a partnership in “Partnership IV Farm” which has a term of 15 years, renewable for another 15
years.
| | --- | ----------------------------------------------------------------------------------------------------------------------





19









We
have a policy of performing annual appraisals of the fair market value of our agricultural properties. We estimate the market value
of our agricultural properties based on each property’s level of development, soil quality and maturity and agricultural
potential. For more information concerning our estimates of the fair market value of our agricultural properties, see Note 10 of
our financial statements for the fiscal year ended June 30, 2018.



Our
estimates of the market value of our agricultural properties are based on several assumptions, methodologies, estimates and subjective
judgments, all of which are inherently subject to significant commercial, economic, competitive and operational uncertainties,
most of which are beyond our control and unforeseeable and therefore no assurance can be given that they are correct. Furthermore,
market values of real estate are subject to significant fluctuations and are also subject to significant commercial, economic and
competitive uncertainties, most of which are beyond our control, and thus such estimates should not be considered as indicative
of the values that we will or may be able to receive in exchange for such properties. For more information on the risks we are
exposed to, see “Item 3—Key Information—Risk Factors.” The table below indicates the historical cost of
acquisition of the land and of subsequent improvements, as well as the estimated fair market value, with respect to our agricultural
properties, as of June 30, 2018.



|Property          |  | Location                            |  | Acquisition
                                   Date |  | Total
                                         Area |         |  | Land
                                                                               andImprovement Costas of
                                                                               June 30, 2018(1) |  |                                                        | Estimated
                                         FairMarket Value as of
 June 30, 2018 |  |  | Appreciation(2) | 
|----------------- |  | ----------------------------------- |  | --------------------------------------------------- |  | --------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------ | ---------------------------------------------------------------------------------------- |  |  | --------------- | 
|                  |  |                                     |  |                                                     |  |                                                     | (ha)    |  |                                                                                                                                                                                                              |  | (R$
                                         millions) |                                                                                          |  |  |                 | 
|Jatobá Farm       |  | Jaborandi/BA                        |  | March 2007                                          |  |                                                     | 30,981  |  |                                                                                                                                                                                                              |  | 56.9                                                   |                                                                                          |  |  | 340.9           | 
|Alto Taquari Farm |  | Alto Taquari/MT                     |  | August 2007                                         |  |                                                     | 5,394   |  |                                                                                                                                                                                                              |  | 35.9                                                   |                                                                                          |  |  | 158.7           | 
|Araucária Farm    |  | Mineiros/GO                         |  | April 2007                                          |  |                                                     | 5,534   |  |                                                                                                                                                                                                              |  | 43.2                                                   |                                                                                          |  |  | 137.8           | 
|Chaparral Farm    |  | Correntina/BA                       |  | November 2007                                       |  |                                                     | 37,182  |  |                                                                                                                                                                                                              |  | 82.0                                                   |                                                                                          |  |  | 312.2           | 
|Nova Buriti Farm  |  | Januaria/MG                         |  | December 2007                                       |  |                                                     | 24,212  |  |                                                                                                                                                                                                              |  | 23.1                                                   |                                                                                          |  |  | 32.1            | 
|Preferência Farm  |  | Barreiras/BA                        |  | September 2008                                      |  |                                                     | 17,799  |  |                                                                                                                                                                                                              |  | 27.7                                                   |                                                                                          |  |  | 58.2            | 
|Moroti Farm       |  | Chaco Paraguay                      |  | December 2013                                       |  |                                                     | 59,490  |  |                                                                                                                                                                                                              |  | 166.5                                                  |                                                                                          |  |  | 188.9           | 
|São
    José Farm |  | São
    Raimundo das Mangabeiras/MA |  | February
    2017                                   |  |                                                     | 17,566  |  |                                                                                                                                                                                                              |  | 106.4                                                  |                                                                                          |  |  | 156.8           | 
|Total             |  |                                     |  |                                                     |  |                                                     | 198,158 |  |                                                                                                                                                                                                              |  | 475.0                                                  |                                                                                          |  |  | 1,385.6         | 












|(1) | Consists of land and capital expenditures, including buildings, infrastructure and other improvements to the property, net
of depreciation expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Appreciation includes the impact of inflation since the acquisition date.
|--- | -------------------------------------------------------------------------



20







|B. | Business Overview
|-- | -----------------



We
are focused on the acquisition, development and exploration of agricultural properties that we believe possess significant potential
for cash flow generation and value appreciation. We seek to transform our acquired properties through investments in infrastructure
and technologies which permit cultivation of high value-added crops (soybean, corn, sugarcane and other) and cattle raising and
from time to time sell our developed properties in order to realize capital gains. We are currently involved in several farming
activities, including grains and sugarcane production and cattle raising.



Agricultural
Activities and Products



Independent Production



As
of June 30, 2018, we were the operators with respect to our entire portfolio of agricultural properties. In the context of our
independent operations, we maintain exclusive control over our production and exclusive responsibility for the acquisition of inputs,
raw materials and equipment, hiring and oversight of employees, and infrastructure investment. We currently sell a substantial
portion of our production to a small number of import/export companies or clients who have substantial bargaining power. Our net
revenue was R$244.3 million for the year ended June 30, 2018 and R$146.9 million for the year ended June 30, 2017. All of our sales
are to clients located in Brazil.



We
enter into short-term contractual arrangements with third-party contractors, at all stages of the production process, for the provision
of services (including our workforce), equipment, and infrastructure needs. We believe that this allows us to be more agile in
adapting to market conditions as they unfold.



Our
agricultural properties are managed by local managers, either on a regional level or for specific properties, depending on the
location and size of each property. On June 30, 2018, we had one manager at São José Farm, Partnership II and Partnership
IV farm, one regional manager for the Chaparral, Jatobá and Preferência farms and one regional manager for the Araucária,
Alto Taquari and Partnership III farms.



Leases



As an alternative to independent production, we leased
in the past, and may lease again in the future, our agricultural properties to third parties.



Generally,
our leases are subject to different obligations depending on the stage of development of the subject property. With respect to
leases of our properties on which the land is undeveloped, lessees are subject to several terms and conditions, including requirements
to invest and to use the techniques and equipment that we believe are necessary and appropriate for the preparation and correction
of the soil in order to facilitate agricultural production. In addition to leases of land, we may also lease individual farmhouses
or warehouses to lessees, pursuant to which we receive a portion of the agricultural production, in kind, produced by the lessee.
Our leases generally last between three to ten years. Under Brazilian law, lessees have a right of first refusal to purchase farms
that were previously leased by them.



Grains



The
planting season for grains runs from September to December, and harvest occurs between February and May. During the planting season
for our 2017/2018 crop year, we planted 35,207 hectares of grains at our grain farms in Brazil. For the years ended June 30, 2018
and 2017, net revenue from sale of grains constituted 39.8% and 46.9% of our net revenue, respectively.



All
distribution of production from the farms is through road transportation. We enter into third-party service contracts with trucking
companies to transport production from our farms to our storage facilities or to our clients.



Sugarcane



The
sugarcane planting season runs from February to May, and harvest occurs between April and November. On June 30, 2018, we had 31,580
hectares planted with sugarcane at our Araucária, Alto Taquari, São José Farm, Partnership III and Partnership
IV farms.



We
entered into a supply contract with Brenco, pursuant to which we currently supply the entirety of our sugarcane production from
our Alto Taquari, Araucária, and Partnership III farms to them. The term of this supply contract covers two full crop cycles,
which consists of six crop years and five harvests, and is scheduled to expire in 2021/2022. In the year ended June 30, 2018 and
as of the date hereof Brenco (ETH Bioenergia) has not defaulted on the payment of any receivable. We currently run the risk of
default by Brenco, our main customer, associated with the fact that its controlling shareholder, Odebrecht S.A., is being investigated
for corruption in the operation called “Lava Jato” (Car Wash).



21







In the table below, we present the aging of the receivables
from Brenco (ETH Bioenergia), based on contractual terms.



|                |  | As of June 30, 2018    |       
|--------------- |  | ---------------------- | ------
|Falling due:    |  | (in thousands ofReais) |       
|                |  |                        |       
|Up to 30 days   |  |                        | 10,538
|30 to 90 days   |  |                        | —     
|91 to 180 days  |  |                        | —     
|181 to 360 days |  |                        | 2,138 
|Total           |  |                        | 12,677



On
May 8, 2015, we entered into a lease agreement with respect to a property located in the municipalities of Alto Taquari and Alto
Araguaia, in the state of Mato Grosso (“Partnership III”), where we have the right to operate an area of 4,263 hectares
by March 31, 2026. The properties are close to Alto Taquari Farm, a region that has had excellent sugarcane production results.
This transaction allows us to make use of the operational structure and team already present in the region and ensure greater property
management flexibility.



We
entered into a supply contract with AgroSerra, pursuant to which we currently supply the entirety of our sugarcane production from
our Partnership IV farm to them. The term of this supply contract is 15 years, renewable for another 15 years.



For
the years ended June 30, 2018 and 2017, net revenue from the sale of sugarcane accounted for 56.6% and 50.1% of our net revenue,
respectively.



Our
farm output is distributed through road transportation. We enter into third-party service contracts with trucking companies to
transport production from our farms to our clients’ sugar and ethanol refineries.



Livestock



On
June 30, 2018, we had 20,993 head of cattle distributed over 15,114 hectares of active pasture.



Others



On
June 30, 2018, we had 24,212 hectares of farmland at our Nova Buriti farm. We are currently in the process of obtaining the necessary
permits in order to begin operations. Due to the difficulties we have been facing in regard to obtaining licenses for the farm,
we are studying alternatives for the property. One such option is to sell the farm to offset the legal reserve, a mechanism contemplated
in the environmental code pursuant to which holders of a legal reserve deficit can acquire another area to solve certain issues.



Investment
properties



On
June 30, 2018, the net book value of our investment properties was R$557.1 million, of which R$425.1 million represented land acquisition
costs and R$132.1 million (net of accumulated depreciation) represented improvements, including building and infrastructure improvements
and costs of clearing and preparing the land. For the years ended June 30, 2018 and 2017, gains on farm sales accounted for R$39.8
and R$26.7 million, respectively.



Agricultural
Properties



On
June 30, 2018, we owned seven agricultural properties, totaling 147,984 hectares of arable land (not including environmental preservation
areas in accordance with Brazilian environmental law), including 26,763 hectares of leased area and 29,745 hectares of Moroti Farm,
located in the Brazilian States of Mato Grosso, Goiás, Minas Gerais, Maranhão, Bahia, Piauí and in Paraguay.
During the planting season for our 2017/2018 crop year, we planted 31,853 hectares of soybean, 3,354 hectares of corn, 31,580 hectares
of sugarcane, 16,280 hectares of other grains (sesame, sorghum and others and leased areas to third parties) and 19,787 hectares
of pasture. Except for part of the Nova Buriti farm, we acquire and hold our agricultural properties through subsidiaries, a structure
we believe will simplify the future sale of such properties in accordance with Brazilian law. In addition, we entered into rural
partnerships to operate agricultural properties, the Partnerships II, III and IV.



São
José Farm: On February 2017, the São José farm was acquired by our subsidiary Imobiliária Ceibo
Ltda. with a total area of 17,566 hectares for R$100.0 million. The property is located in the State of Maranhão, in the
Northeastern region of Brazil.



We
acquired 17,566 hectares, 10,137 hectares of which are arable and have already been developed, and will be used for the planting
of grain crops. The other 7,429 hectares are permanent preservation and legal reserve areas. The acquisition price is R$100.0 million
(R$10 thousand/arable hectare).



The
agricultural partnership consists of 15,000 hectares of arable and developed land, already planted mostly with sugarcane. The agricultural
partnership has a term of 15 years, which may be extended for the same period.



During
the planting season for our 2017/2018 crop year, we planted 5,302 hectares of soybean, 350 hectares of second crop corn and 19,960
hectares of sugarcane at the São José farm.



Jatobá
Farm: The Jatobá farm has an area of 30,981 hectares and was acquired by us, in partnership with Grupo Maeda, in
2007, for R$33.0 million. On May 12, 2012, we acquired Grupo Maeda’s partnership stake and became 100% owners of the Jatobá
farm, through our subsidiary Jaborandi Propriedades Agrícolas. The property is located in the Municipality of Jaborandi,
State of Bahia, in the Northeastern region of Brazil, which we believe to be advantageous for export purposes due to the presence
of the Port of Candeias in the State of Bahia.



On
June 30, 2017, we sold 625 hectares of our Jatobá farm, 500 of which are arable, for a total sale price of R$10.1 million,
equivalent to 300 soybean bags per arable hectare. In July 2018, we sold 9,784 hectares of our Jatobá farm, 7,485 of which
are arable, for a total sale price of R$164.8 million, equivalent to 285 soybean bags per arable hectare. After these sales, the
area of Jatobá farm held by us was 21,197 hectares, of which approximately 16,741 hectares are arable.





22









Alto
Taquari Farm: The Alto Taquari farm has an area of 5,394 hectares and was acquired by our subsidiary Imobiliária
Mogno in August 2007 for R$33.2 million. The deed was granted in September 2015 after we paid the outstanding balance of R$27.4
million. Prior to our acquisition, the Alto Taquari farm was used for grain cultivation and cattle raising. As of June 30, 2018,
we had 3,511 hectares planted with sugarcane. The 2009/2010 crop year marked the beginning of our obligations in compliance with
our supply contract with Brenco, under which we supply the entirety of our sugarcane production from the Alto Taquari farm to them
for a term of two complete crop cycles (six crop years and five harvests), which is expected to end in 2020. The property is located
in the Municipality of Alto Taquari, State of Mato Grosso.



Araucária
Farm: The Araucária farm was acquired by our subsidiary Imobiliária Araucária in April 2007, in partnership
with Brenco, in the proportion of 75% and 25%, respectively, for the total amount of R$80.0 million. The deed for Araucária
farm was granted on November 20, 2008, and it was registered on November 24, 2008, upon which date our partnership with Brenco
was terminated and from which point we were the sole owners of 9,682 hectares of the Araucária farm, equivalent to R$70.7
million. The property is located in the Municipality of Mineiros, State of Goiás, and is primarily used for the cultivation
of sugarcane and grain.



On
May 2018, we sold 956 hectares of our Araucária Farm, 660 of which are arable (for a total sale price of R$52.4 million,
equivalent to 1,208 soybean bags per arable hectare). On March 27, 2017, we sold 274 hectares of our Araucária Farm, 200
of which are arable, for a total sale price of R$12.5 million or (R$13.2 million nominal value, equivalent to 1,000 soybean bags).
On May 30, 2017, we sold 1,360 hectares of our Araucária Farm, 918 of which are arable, for a total sale price of R$17.0
million, equivalent to 280 soybean bags. On April 25, 2013, we sold 394 hectares of our Araucária farm, 310 of which are
arable, for a total sale price of R$10.3 million, equivalent to 48,000 soybean bags, and on June 27, 2014, we sold 1,164 hectares
of our Araucária Farm, 913 of which are arable, for a total purchase price of R$41.3 million, equivalent to 735,000 soybean
bags. After the sales, the area of Araucária farm held by us was 5,534 hectares, of which approximately 4,124 hectares are
arable.



The
2009/2010 crop year marked the beginning of our obligations under our supply contract with Brenco to supply the entirety of our
sugarcane production from the Araucária farm to them for a term of two complete crop cycles (six crop years and five harvests),
which is expected to end in 2020.



Chaparral
Farm: The Chaparral farm has an area of 37,184 hectares and was acquired by our subsidiary Imobiliária Cajueiro
in November 2007 for R$47.9 million. The deed was granted on September 29, 2008 and was registered on December 12, 2008. During
the planting season for our 2017/2018 crop year, we planted 9,596 hectares of soybean and 795 of corn, 4,673 hectares of pasture,
and 3,919 hectares of other grains there. The property is located in the Municipality of Correntina, State of Bahia.



Nova
Buriti Farm: The Nova Buriti farm has an area of 24,212 hectares and was acquired in December 2007 for the total amount
of R$22.0 million. The transfer of 3,064 hectares was made in May 2010 to our subsidiary Imobiliária Flamboyant Ltda. and
the remaining 21,147 hectares was transferred to us in August 2017, upon the payment of the balance of the price of the amount
of R$12.8 million, with the exclusion of the monetary correction as negotiated with the seller. Our subsidiary Imobiliária
Flamboyant Ltda. holds a 13% interest in the property, and we hold the remaining 87%. The property is located in the municipality
of Bonito de Minas and Cônego Marinho, State of Minas Gerais in the Southeastern region of Brazil, which is in close proximity
to major iron producers who utilize large quantities of biofuel, especially from eucalyptus wood, to generate electricity.



We are currently in the
process of obtaining the necessary permits in order to begin operations. Due to the difficulties we have been facing in regard
to obtaining licenses for the farm, we are studying alternatives for the property. One such option is to sell the farm to offset
the legal reserve, a mechanism contemplated in the environmental code pursuant to which holders of a legal reserve deficit can
acquire another area to solve certain issues.



Preferência
Farm: The Preferência farm has an area of 17,799 hectares and was acquired in September 2008 by our subsidiary Imobiliária
Cajueiro for R$9.6 million. The deed was granted on September 4, 2009, and registration was made on February 24, 2010. The property
is located in the Municipality of Barreiras, State of Bahia. We use the property for cattle raising and grain cultivation. During
the planting season for our 2017/2018 crop year, we have 6,376 hectares of pasture, and 134 hectares of other grains there.



On June 30, 2018, we had 20,993 head of cattle, distributed
through over 15,114 hectares of active pasture in our cattle operations in Brazil and Paraguay



Partnership
II: On October 11, 2013, we entered into a partnership with respect to Partnership II farm for up to 11 harvests, which
is expected to end in October 2024. The Partnership II farm is located in the municipality of Ribeiro Gonçalves, in the
state of Piauí, which has had excellent grain production results. We operate an area up to 7,500 hectares, which is suitable
for grain crops. During the planting season for our 2017/2018 crop year, we planted 7,452 hectares of soybean at the Partnership
II farm.



Partnership
III: On May 8, 2015, we entered into a lease agreement with respect to a property located in the municipalities of Alto
Taquari and Alto Araguaia, in the state of Mato Grosso (“Partnership III”), where we have the right to operate an area
of 4,263 hectares until March 31, 2026. The properties are close to the Alto Taquari Farm, a region that has had excellent sugarcane
production results. This transaction allows us to make use of the operational structure and team already present in the region
and ensure greater property management flexibility.



Partnership
IV: On February 7, 2017, we entered into a lease agreement with respect to a property located in the municipalities of
São Raimundo das Mangabeiras, in the state of Maranhão (“Partnership IV”), where we have the right to
operate an area of 15,000 hectares. The agricultural partnership is already planted mostly with sugarcane and has a term of 15
years, renewable for another 15 years.



Partnership
V:On August 28, 2018, we entered into a lease agreement with respect to a property located in the municipalities
of São Félix do Araguaia, in the state of Mato Grosso (“Partnership V”), where we have the right to operate
an area of 23,568 hectares for up to 10 years. The area will be cultivated with grains during the upcoming 2018/2019 harvest year.
These areas are mature, with more than 5 years under production and are suitable for a second crop.



Cresca:Cresca is a company that invests in agricultural and cattle raising land in Paraguay. On December 12, 2013, we entered
into an agreement with Cresud, our controlling shareholder, for: (i) the acquisition of its interest in Cresca S.A., representing
a 50% interest of the company, (ii) the assumption of Cresud credits with Cresca, and (iii) the execution of an advisory service
agreement, pursuant to which Cresud agreed to render services to Cresca in exchange for the payment of fees. The total consideration
of the transaction was US$19.8 million.





23









On
the purchase date, Cresca had approximately 81,000 hectares and had a contract for the right to purchase approximately 61,000 additional
hectares of agricultural land in the region of Mariscal Estigarribia in Paraguay. Pursuant to this agreement, Cresca purchased
35,864 hectares on July 9, 2014, and the remaining 24,753 hectares on January 20, 2015.



On
April 4, 2014, Cresca sold 24,624 hectares in Paraguay, 12,312 of which are arable, for a total price of US$14.8 million (US$600
per hectare). The purchaser made an initial payment of US$1.9 million and paid the first installment in the amount of US$4.3 million
upon the execution of the property transfer deed and the sold area possession transfer. The purchaser made payments totaling the
amount of US$3.7 million in 2015 and a final payment of US$4.9 million on July 20, 2016.



On
October 5, 2016, we entered into an agreement with Carlos Casado, our partner in Cresca at the time,pursuant to which we
agreed to try to sell all the land that Cresca owned for a 120-day period as of the execution date of the aforementioned agreement.
Further to the provisions of the agreement, we and Carlos Casado also agreed to split ownership of the land among us and Carlos
Casado if either party failed to dispose of the totality of the land within the 120-day period.



As
the properties were not sold to third-parties, on June 6 and June 8, 2017, we and Carlos Casado decided to proceed with the spin-off
of Cresca, whereby we would separate and divide the assets and liabilities of Cresca, and Cresca would distribute them to us and
to Carlos Casado. As a result of this transaction, we now have the following two subsidiaries that received Cresca’s assets
and liabilities: (i) Palmeiras, which was incorporated to operate the activities of the Company’s investment in Cresca and
(ii) Moroti, a subsidiary that received, on February 9, 2018, upon conclusion of the formal spin-off process, all other assets
and liabilities of Cresca attributed to BrasilAgro, including land and debts.



On
February 9, 2018, the spin-off of Cresca was concluded and the portion of assets and liabilities attributed to the Company was
transferred to the wholly-owned subsidiary Moroti.



As
part of the spin-off, the Company and Carlos Casado, partners in the joint venture, decided to waive the interest for late payment
on the intercompany loans taken by Cresca in the total amount of R$32.9 million, of which BrasilAgro’s share was R$16.6 million.
See Note 23 to our financial statements for the fiscal year ended June 30, 2018.



As
of June 30, 2018, Moroti owns 59,490 hectares of which 29,745 were arable. During the planting season for our 2017/2018 crop year,
we planted 5,300 hectares of soybean, 776 hectares of corn, 1,187 hectares of other grains and 3,733 hectares of pasture in the
farm in Paraguay.



Investment
in Brenco – Companhia Brasileira de Energia Renovável



In
March 2007, we acquired an indirect minority interest in Brenco, controlled by Odebrecht S.A., through our 40.65% investment in
Green Ethanol LLC (previously known as Tarpon All Equities Fund LLC), which we acquired for a purchase price of US$2.5 million.
Green Ethanol LLC held 2.47% of the capital stock of Brenco, including 7,600,000 warrants issued by Brenco. In March 2008, we signed
contracts for the exclusive supply to Brenco of the entirety of our sugarcane production over two full crop cycles. See “Item
4—Information On the Company—Material Agreements.”



In
September 2008, Green Ethanol LLC decreased its shareholding in Brenco to 1.55% of Brenco’s capital stock, which percentage
was subsequently increased to 3.8% in December 2008. In February 2010, ETH Bioenergia acquired substantially all of the capital
stock of Brenco, thereby diluting our indirect ownership interest (held through Green Ethanol LLC) to 0.046% of Brenco’s
capital stock as of December 31, 2010. As a result of the losses incurred by Brenco and of the significant level of debt, we carried
out an impairment analysis of our investment interest in Brenco. As a result of such assessment, we recorded an impairment loss
on our investment of R$6.6 million as of July 1, 2009.



Commodity Futures Contracts



We
enter into sales contracts for the future sale and physical delivery of our agricultural commodities to international import/export
companies. Such contracts are primarily with respect to soybean, but also include sugarcane in connection with our exclusive supply
agreement with Brenco. In the case of soybean, we may contract a fixed price for all or part of the volume to be delivered. The
price is determined according to a contractual formula based on the soybean quotation at the Chicago Board of Trade (CBOT). The
price established in U.S. dollars is paid at the end of the commitment period, in Reais, according to contractually defined
exchange rates prevailing a few days before settlement. The terms of the agreements subject us to fines in the event that we fail
to deliver the previously-committed volumes to the purchaser.



Material Agreements



Partnership
V (3SB Produtos Agrícolas S.A.)



On August 28, 2018, we
entered into an agricultural partnership agreement in relation to a property in São Félix do Araguaia, state of Mato
Grosso, or Partnership V. This agreement establishes an agricultural partnership with 3SB Produtos Agrícolas S.A., which
consists of an exploration agreement of an area of 23,568 hectares of arable land for a period of 10 years.



Partnership
IV (Agroserra – Agro Pecuária e Industrial Serra Grande Ltda.)



On February 7, 2017,
we entered into two agreements for an agricultural partnership in relation to a property in São Raimundo das Mangabeiras,
state of Maranhão, or Partnership IV.



The first agreement under
Partnership IV establishes an agricultural partnership with Agro Pecuária e Industrial Serra Grande Ltda. (“Serra
Grande”), which consists of a sugarcane exploration agreement of an area of around 15,000 hectares. The agricultural partnership
will last for 15 years from the date of the agreement and may be extended for the same period. The amount to be paid to Serra Grande
corresponds to 10% of the entire production obtained in the area referred to in the agreement and the initial volume to be produced
in the area during the first year of the agreement was established at 850,000 tons. After this period, spanning between one and
five years, the minimum volume to be produced in the partnership areas is 4,500,000 tons of sugarcane, and from the sixth year
onward until the expiration of the agreement, the minimum production volume is 1,250,000 tons of sugarcane per crop year.





24









The second agreement
under Partnership IV governs the rights and obligations of the agricultural partners, through which BrasilAgro acquired sugarcane
crops planted by the agricultural partner in the areas referred to in the partnership agreement described above. This agreement
meets the definition of a finance lease. As consideration, BrasilAgro undertakes to return, at the end of the agreement, the area
referred to in the partnership agreement together with sugarcane stubble crops with the capacity to produce 850,000 tons of sugarcane
in the crop year subsequent to the termination of the agricultural partnership agreement.



Brenco
– Companhia Brasileira de Energia Renovável



In
March 2008, we signed two contracts for the exclusive supply to Brenco of the entirety of our sugarcane production over two full
crop cycles (for sugarcane, one full crop cycle consists of six agricultural years and five harvests). They are expected to expire
in 2020, but are renewable upon the agreement of the parties. One of the contracts refers to our cultivation from an area of approximately
5,718 hectares at our Araucária farm and the other refers to approximately 3,669 hectares at our Alto Taquari farm. The
price per ton, for the purpose of these agreements, is determined based on Total Recoverable Sugar (ATR) price per ton of sugarcane
effectively delivered, with ATR corresponding to the quantity of sugar available in the raw material, minus sugar content lost
during the production process, multiplied by the market prices of sugar and ethanol sold by regional plants in the internal and
external market, in each case, as determined by the Counsel of Sugarcane, Sugar and Alcohol Producers in São Paulo (Conselho
de Produtores de Cana, Açúcar e Álcool de São Paulo, or CONSECANA). For the year ended June 30,
2018, net revenues of our sugarcane production to Brenco were R$81.4 million, representing 33% of our total net revenue. The purpose
of the contracts is not to secure a more favorable price than the market price, since we expect that the ATR price as determined
by CONSECANA will be generally equivalent to the market price, but rather to secure the sale of our sugarcane production over the
long term. We believe this gives us the predictability that makes it practicable for us to grow and commercialize sugarcane, given
that sugarcane crops have a productive cycle lasting six years from the first harvest.



On May 8, 2015, we executed
three agreements with Brenco:



The
first agreement consists of a rural sub partnership to operate nine farms located in the municipalities of Alto Araguaia and Alto
Taquari, in the state of Mato Grosso. The sub partnership started at the date of its signature and is estimated to end on March
31, 2026. The areas are to be used for the plantation and cultivation of sugarcane, which cannot exceed the duration of the contract.
This contractual partnership meets the definition of an operating lease. The payment must always be in kind (tons of sugarcane)
and delivered at the mill owned by Brenco, which is located in the vicinity of the farms, during the harvest period of the product.
The quantity to be paid for the duration of the contract shall be established in tons per hectare and varies according to the area
being explored. According to this contract, the quantity to be paid in the long term corresponds to 529,975 tons of sugarcane,
of which 174,929 tons will be paid within one to five years and 355,046 tons will be paid after more than five years up to the
expiration of the agreement.



The
second agreement relates to the regulation of rights and obligations between agricultural partners from whom BrasilAgro acquired
the crops of sugarcane planted by Brenco in the properties subject to the sub partnership agreement described above. This contract
meets the definition of a financial leasing. The payment must always be in kind (tons of sugarcane) and delivered at the mill owned
by Brenco during the harvest period of the product. According to this contract, the quantity to be paid in the long term corresponds
to 53,845 tons of sugarcane, of which 18,604 tons will be paid within one year and 35,241 tons will be paid within one to five
years.



For the year ended June 30,
2018, we delivered a total of 843 million tons of sugarcane pursuant to the agreements described above.



The
third agreement regulates the exclusive supply to Brenco of the total sugarcane production in the properties included in the sub
partnership agreement for two crop cycles, one cycle shall be effective until the depletion of the already existing sugarcane crops
and the other cycle consists of the sugarcane being planted by BrasilAgro.



In
the year ended June 30, 2018 and as of the date hereof Brenco (ETH Bioenergia) has not defaulted on the payment of any receivable.
However, we currently run the risk of default by Brenco, our main customer, associated with the fact that its controlling shareholder,
Odebrecht S.A., is being investigated for corruption in the operation called “Lava Jato” (Car Wash). Odebrecht’s
CEO has been arrested and the company has been facing the following issues: difficulties to access the credit market, decrease
in its business activities, early maturity of debts, among others. Therefore, Brenco’s controlling shareholder has been cutting
costs, which can adversely affect Brenco, its business and its ability to meet its payments due to us.



Cresca



On
October 5, 2016, we entered into an agreement with Carlos Casado, our partner in Cresca at the time,pursuant to which we
agreed to try to sell all the land that Cresca owned for a 120-day period as of the execution date of the aforementioned agreement.
Further to the provisions of the agreement, we and Carlos Casado also agreed to split ownership of the land among us and Carlos
Casado if either party failed to dispose of the totality of the land within the 120-day period.



As
the properties were not sold to third-parties, on June 6 and June 8, 2017, we and Carlos Casado decided to proceed with the spin-off
of Cresca, whereby we would separate and divide the assets and liabilities of Cresca, and Cresca would distribute them to us and
to Carlos Casado.



As
a result of this transaction, we now have the following two subsidiaries that received Cresca’s assets and liabilities: (i)
Palmeiras, which was incorporated to operate the activities of our investment in Cresca and (ii) Moroti, a subsidiary that was
received, on February 9, 2018, upon conclusion of the formal spin-off process, all other assets and liabilities of Cresca attributed
to BrasilAgro, including land and debts.



On
February 9, 2018, the spin-off of Cresca was concluded and the portion of assets and liabilities attributed to the Company was
transferred to the wholly-owned subsidiary Moroti.



As
part of the spin-off, the Company and Carlos Casado, partners in the joint venture, decided to waive the interest for late payment
on the intercompany loans taken by Cresca in the total amount of R$32.9 million, of which BrasilAgro’s share was R$16.6 million.
See Note 23 to our financial statements for the fiscal year ended June 30, 2018.



As
of June 30, 2018, Moroti owns 59,490 hectares of which 29,745 were arable. During the planting season for our 2017/2018 crop year,
we planted 5,300 hectares of soybean, 776 hectares of corn, 1,187 hectares of other grains and 3,733 hectares of pasture in the
farm in Paraguay.





25









Raw
Material Acquisition Risks



For
the acquisition of farming inputs, our primary risks are foreign-exchange variations, the supply and demand of each input, farming
commodity prices and freight prices. Our dependence on imported raw materials is also subject to supply and customs clearance delays.
We are also subject to risks regarding the availability of the specific varieties of seeds we use, which are affected by weather
conditions, among other factors.



In
addition, the price of diesel fuel, which is the primary fuel used in farming machinery and trucks, is affected by the variation
in oil prices as well as by the price-control policies adopted by the Brazilian government.



See
“Item 3—Key Information—Risk Factors—Risks Relating to our Business and Industry” for information
regarding the prohibition of the use of glyphosate and the freight rate schedule.



Customers



We
currently sell a substantial portion of our total crop production to a small number of clients who have substantial bargaining
power. For the year ended June 30, 2018, our three largest customers, Brenco, Agroserra and Bunge, accounted for 69.3% of our total
revenue. See “Item 3—Key Information—Risk Factors— Substantially all of our revenue is derived from a small
number of clients, and we currently face a risk of default by our main customer.”



Competition



The
agriculture industry is composed of widely traded commodities, where the prices are freely determined based on supply and demand.
The supply side is characterized by a large number of producers, each contributing a small part of the total production and thus
having minimal influence over commodity prices, which are generally determined by indexes or exchanges in international markets,
as is the case with soybean, the price of which is largely determined by the CBOT. Agricultural commodity producers therefore compete
largely based on their production costs, and their scale of production. At the domestic level, producers compete on similar conditions,
whereas at the international level, competition is affected significantly by, among other factors, government policies such as
subsidies to agricultural producers, which can be substantial in developed countries.



Land
acquisition is subject to intense competition. In this case, we compete to acquire the most appropriate land for cultivating our
agricultural products. We believe that this process has contributed to an increase in land prices over the years and that the strongest
competition has been from the larger groups having in-depth knowledge of the sector, management excellence and continuous objectives
to increase their agricultural area portfolio. We understand that these large groups are mainly SLC Participações,
operating in four Brazilian states; and Terra Santa Agro. In addition, we may face significant competition from large international
companies which have greater financial resources than we do.



Seasonality



Our
principal products are subject to seasonality variations between the crop season and the off-season. The off-season occurs between
the end of the harvest of a crop year and the beginning of the harvest of the following crop year. Such period occurs at different
parts of the year depending on the agricultural product, as follows: (i) the off-season for grains in Brazil typically occurs between
August and January; (ii) the off-season for sugarcane in Brazil typically occurs between December and March; and (iii) the off-season
for cattle-raising in Brazil typically occurs between September and January. Because of the reduced supply of agricultural products
during each product’s respective off-season, prices for such products are typically higher during that time.



Throughout
the year, our working capital needs vary significantly depending on the harvest period of grains, sugarcane and other crops in
Brazil. Changes in the harvest periods, resulting from unfavorable weather or financial restrictions on us, have a direct impact
on our inventory levels, advances to producers, loans and sales volume during the year.



Insurance



Our businesses are generally
subject to a number of risks and hazards, which could result in damage to individuals, or destruction of properties, facilities
and equipment. As a general rule, we believe that our insurance coverage against risks that are typical in our business is adequate
and consistent with the usual practices adopted by other companies operating in the same sector in Brazil. Nevertheless, we cannot
guarantee that the coverage set forth in our insurance policies will suffice for purposes of protecting us from all losses and
damages that may occur.



The Company has a civil
liability insurance which is intended to ensure us, as the insured party, up to the maximum limit of the insurance policy, R$5
million, from expenses for which the Company may be held liable by virtue of compensation for damages caused to third parties.
This policy is currently in force and will expire on November 19, 2018.



We also have a business
insurance (rural multi-risk) for storage structure (silo) and its machinery located at our farm named “Fazenda Chaparral”
located at in the City of Correntina, State of Bahia, at Rodovia BR 349 - Km 228. This policy is currently in force and will expire
on November 19, 2018.



We have also contracted
a Directors and Officers (D&O) insurance policy, which covers the members of our board of directors, executive board, audit
board or any other statutory body or body created by our bylaws or any natural person who has proper powers to represent the Company
before third parties or whose position or function implies such representation, subject to the limits provided in the respective
insurance policy. This insurance policy covers civil liability up to R$30 million; and a coverage against environmental damages
up to R$ 4 million. This policy is currently in force and will expire on November 21, 2018.



We have already started
the negotiations with both our broker and insurance companies regarding the aforementioned insurances to have timely renewal prior
to their expiry dates.



The Company also contracted
insurance for certain specific machines (harvesters and planters), as well as for its irrigation pivot system at our farm “Fazenda
São José.”





26









Intellectual
Property



In Brazil, title to a patent
or trademark is obtained by means of the registration with the National Institute of Industrial Property (Instituto Nacional de
Propriedade Industrial, or INPI). When such right is granted, the titleholder is ensured the exclusive use right thereof all over
Brazil for a period of ten years, which may be renewed for successive equal periods indefinitely, as long as there is an interest
in maintaining the trademark ownership.



Pursuant to the Brazilian
legal framework, a trademark can be categorized as either a product, service, certification or collective mark. With regard to
its presentation in local law, the trademarks can be nominative, mixed, figurative or three-dimensional. During the registration
process, the depositor has an expectation of right to use the deposited trademarks, which he may avail himself from in order to
identify its products or services until the registration process is ultimately concluded.



We have filed three trademark
registration applications at the INPI for the trademark name (which corresponds to our current corporate name) “BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas” under applications No. 828045089, 828045097 and 828045100.
The analysis of trademark application No. 828045089 is currently postponed pending the final decision of another trademark registration
application in order to avoid conflict of interest between the Company and other third parties. By its turn, service trademark
application No. 828045097 in NCL (8) 35 marketing, distribution, importation and export of agricultural and livestock products
was approved by the INPI on June 5, 2012 and expires on June 5, 2022. Finally, application No. 828045100, for NCL (8) 31 products
related to agriculture and livestock, such as agricultural products, vegetables, forestry, grains and animals, fruits, vegetables,
seeds, plants and natural flowers and food for animal was granted to the Company by the INPI on September 20, 2016 and expires
on September 20, 2026.



We
also have filed three trademark registration applications for the trademark name “BrasilAgro – Companhia Brasileira
de Propriedades Agropecuárias,” under applications No. 827971575, 827971567 and 827971583. One of such applications,
No. 827971567, was rejected based on INPI’s considerations of previously filed trademark applications. We filed an appeal
and await a final decision from the INPI regarding this particular application. Our business has not been affected by the refusal
of this trademark registration application given that such application has as subject matter the trademark name “BrasilAgro
– Companhia Brasileira de Propriedades Agropecuárias,” which is not our actual corporate name (our actual corporate
name is “BrasilAgro – Companhia Brasileira de Propriedades Agrícolas”) and was filed at the time as a
cautionary measure when we were in the process of deciding our corporate name. In addition, the other two applications, No. 827971575
and 827971583, were approved on June 14, 2011, expiring on June 14, 2021 and on January 28, 2014, expiring on January 28, 2024,
respectively.



In
addition, we filed three trademark registration applications for the single name “BrasilAgro.” The first one, filed
at INPI under No. 829541870 is a service trademark, refers to NCL (9) 35 - marketing, distribution, importation and export of
agricultural and livestock products, was approved on November 1, 2011 and expires on November 1, 2021. The second one, filed under
No. 829541853, refers to a product trademark, on NCL 31, involving products related to agriculture and livestock, such as agricultural
products, vegetables, forestry, grains and animals, fruits, vegetables and fresh vegetables, seeds, plants and natural flowers,
animal food and malt, was approved on September 20, 2016 and remains in force until September 20, 2026. Finally, the third trademark
registration application for the name “BrasilAgro” had the analysis thereof postponed by means of a decision dated
June 28, 2011 and is currently halted given that it is pending of evaluation of another prior trademark registration application
by the INPI.



Risk
Management



We
analyze and monitor the various risks to which our business and operations are exposed. In addition to monitoring the specific
factors that directly affect our agricultural production and business operations, we also monitor the risks derived from commodity
price variations for our individual agricultural products, as well as foreign-exchange variations. Through our risk management
policy coordinated among our Strategic Planning department, Risk Management Committee and board of directors, we hedge our exposure
to commodity price risks for our transactions through over-the-counter instruments including options and futures contracts negotiated
in the commodity market and maintain our exposures within pre-established limits.



Cash
Management



To
the extent we are unable or decide not to deploy our capital through agricultural property acquisitions or other investments, we
maintain any uninvested cash and cash equivalents in an investment fund, which holds investments in fixed income securities in
short-term, liquid investments (such as bank certificates of deposit, government securities and other cash-equivalents).



Regulation



In addition
to the descriptions of regulatory matters set forth below, see the description of certain legal proceedings, including judicial
and administrative proceedings relating to regulatory matters, set forth in “Item 8—Financial Information—Legal
Proceedings.”



Environmental
Regulation



The
development of our agribusiness activities depends on a number of federal, state and municipal laws and regulations related to
environmental protection. We may be subject to criminal and administrative penalties, besides being obligated to restore the environment
and reimburse third parties for possible damages arising from non-compliance with such laws and regulations.



Administrative
Liability



Administrative
liability derives from an action or omission that results in violation of the standards of preservation, protection or restoration
of the environment. Federal Decree No. 6,514 of July 22, 2008 establishes a set of sanctions that may be imposed as a result of
breach of environmental regulation. Such sanctions include warning, fine, destruction of the product, suspension of activities,
termination of tax benefits and credit lines granted by public institutions. Fines are determined based on the relevance and economic
impact of the breach and can reach R$50.0 million. See “Item 3—Key Information—Risk Factors.”



Civil
Liability



Under
civil law, the offender is strictly liable for any environmental damage and subject to an objective standard of care, which creates
liability regardless of negligence by the offender. Consequently, we are jointly liable with any third parties providing services
for us to the extent their activities cause environmental damage. Environmental regulation also permits the regulator to recover
damages from the controlling entity through the chain of share ownership if the direct offender is unable to pay the related damage.





27









Criminal
Liability



Our
officers, directors, employees and agents who engage in environmental crimes are subject to criminal sanctions, including fines,
prison sentences and the imposition of community service requirements.



Environmental
Licenses



Environmental
licensing is required for activities utilizing environmental resources that are considered potentially pollutant, or those that
may in any way cause environmental degradation. Some Brazilian states and Paraguay require licenses for agricultural and animal-raising
activities.



The
environmental licensing procedure includes “prior,” “installation” and “operating” licenses.
A “prior” license is granted during the preliminary phase of planning the enterprise or activity to authorize its location
and concept and attesting to its environmental feasibility. An “installation” license authorizes the installation of
an enterprise or activity in accordance with the specifications stated in approved plans, programs and projects. An “operating”
license authorizes an activity or enterprise to operate after the conditions stated in the “prior” licenses are fulfilled
and verified, with environmental protection measures and certain conditions for operations. This last license must be renewed at
the end of its period of validity, which is determined by the competent environmental agency depending on the activity being developed.



For
the Paraguay farm, we obtained the approval of the environmental impact study and we are in the process of obtaining the licenses
for the suppression of vegetation for the remaining area.



For
the Nova Buriti farm, we are studying and analyzing some alternative options, such as: environmental servitude, quota of environmental
reserve and compensation of legal reserve.



Agriculture
and livestock activities are currently required by law to obtain a special environmental license. We obtained such a license for
the Jatobá and Chaparral farm and we must obtain one for the Preferência farm by 2021.



For
the Alto Taquari farm, because of a change in the state’s environmental laws, we are in the process of re-validating the
licenses.



Protected
Areas



All
rural properties in Brazil are required by law to maintain legal reserve areas. A legal reserve area is an area of each rural property
where deforestation is not allowed and that is necessary for the sustainable use of natural resources, conservation and rehabilitation
of ecological processes, conservation of biodiversity and shelter and protection for native fauna and flora. These areas are required
in perpetuity and in some cases are recorded as such in the real estate registry.



It
is mandatory to maintain as legal reserve at least 80% of an agricultural property located in Floresta biome within Amazonia Legal,
35% for an agricultural property in the savannah region within Amazonia Legal and 20% for an agricultural property located in other
forms of native vegetation in other regions of Brazil. In Paraguay, it is mandatory to maintain as legal reserve at least 25% of
all agricultural property with more than 20 hectares in forest regions and also a corridor of native vegetation of at least 100
meters for every 100 hectares of agricultural or livestock.



All
of our properties have legal reserve areas, although a part thereof has legal reserves that are in the process of being recorded
at the offices of the applicable government agency. Additionally, environmental laws protect other areas, such as permanent preservation
areas.



Permanent
preservation areas are spaces, in both public domain and private domain, where the exercise of property rights has been limited.
Permanent preservation areas include the margins of any water streams, the surroundings of headwaters and of natural water reservoirs,
as well as lands inclined more than 45o. It will only be possible to modify these areas through previous authorization by
the competent state environmental body.



In addition
to these areas, there are also areas for environmental compensation, and ecological corridors, which safeguard interconnection
of fragments of vegetation, ensuring protection of local biodiversity. Protected areas may not be suppressed, and may be used only
under a regime of sustainable forest stewardship in accordance with technical and scientific criteria set forth in applicable regulations.



A total
of 67,153 hectares, or approximately 35.6 % of the total area of our properties, consist of protected areas.



Suppression of Vegetation



We
are in the process of obtaining authorization for suppression of vegetation with respect to 6.6% of our current land holdings upon
which we have not yet commenced crop cultivation operations and that are not part of our legal reserve or permanent preservation
areas, from the relevant environmental authorities in the locations where required. Accordingly, with respect to such areas where
such authorization is required, we will not be able to commence crop cultivation operations until such authorizations are obtained.
Because such authorizations depend upon governmental agencies, we are unable to provide an estimate of the time frame for receiving
such approvals.



Rural Environmental Register (CAR)



In
Brazil, all rural properties are required by law (Law No. 12.651/12 and Decrees Nos. 7.830/2012 and 8.235/2014) to register with
the rural environmental register (CAR). This electronic registration integrates environmental information regarding the property,
deforestation control, the monitoring and combating of forests and other forms of native vegetation, as well as environmental and
economic planning of rural properties. The CAR gathers environmental information for each property regarding the situation of permanent
preservation areas, legal reserve areas, forests and remnants of native vegetation, restricted use areas, consolidated areas, etc.



This
register requires the rural proprietary to regularize their environmental situation. It is a requirement to have access to credit,
however, sanctions are not imposed for those who are not registered with CAR.





28









All of our properties are registered
with CAR.



Ownership of Agricultural Land in Brazil by Foreigners



On
August 23, 2010, opinion No. LA-01, of August 19, 2010, issued by the Federal Attorney General (AGU) was approved by the President
of Brazil. The opinion addresses the purchase and lease of agricultural properties by Brazilian companies controlled by foreign
individuals or legal entities holding the control of the capital stock of a company that owns land in Brazil. The Federal Attorney
General’s opinion provides that Brazilian companies controlled by non-Brazilians require prior authorization to purchase
agricultural properties and are subject to restrictions, including the following:



| | i. | the agricultural properties shall be used for agricultural, cattle raising
or industrial activities, and shall be previously approved by the Ministry of Agrarian Development or by the Ministry of Development,
Industry and Foreign Trade;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | the total area of agricultural properties owned by foreigners shall not
exceed the greater of (A) one fourth of the area of the municipality where the property is located; or (B) the sum of the areas
held by foreigners of the same nationality shall not exceed 40% of the area of the municipality where the property is located;
and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | the acquisition shall not exceed 100 indefinite exploration modules, which
are measurement units defined by INCRA. The MEI, which are measurement units adopted by INCRA, is subject to alterations by INCRA
in case of changes in the economic conditions of a given region. Currently the size of the MEI range from five to 100 hectares,
depending on the region.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



New
acquisitions or new lease agreements of agricultural properties by companies controlled by non-Brazilians within the above-mentioned
limits must be previously approved by INCRA. The request for the approval must be filed at the Regional Branch of INCRA (Superintendência
Regional) of the State where the property is located. After that, INCRA will analyze the compliance with the above-mentioned
requirements and if the transaction is approved by INCRA, it will issue a certificate of approval. The purchase and lease of agricultural
properties beyond the limits of areas and percentages mentioned above require prior authorization from the Brazilian Congress.



In
both cases, it is not possible to determine an estimated time frame for the approval procedure, since up to the date of the issuance
hereof, there is no report involving the issuance of such a certificate. Moreover, for the time being, Brazilian courts have not
yet ruled on the effectiveness and constitutionality of the contents of the aforementioned Attorney General’s Opinion.



As of June 30, 2018, approximately
78% of our common shares were held by foreigners.



On
December 11, 2012, São Paulo’s General Comptroller of Justice (Corregedoria Geral de Justiça do Estado de
São Paulo) issued Opinion No. 461/2012-E, establishing that entities providing notary and registrar services located
in the State of São Paulo are exempt from observing certain restrictions and requirements imposed by Brazilian Federal Law
No. 5,709/71 and Decree No. 74,965/74, regarding Brazilian companies with the majority of the capital stock comprised by foreigners
residing outside of Brazil or legal entities incorporated abroad. In April 2013, the Regional Federal Court for the Third Region
(Tribunal Regional Federal da 3a Região – TRF) granted an injunction in the context of a claim brought
by INCRA and the Federal Government against São Paulo’s General Comptroller of Justice Opinion No. 461/2012-E, suspending
the effects of such opinion. In August 2013, the Regional Federal Court of the Third Region acknowledged its lack of jurisdiction
to rule on such claim and sent the court records of the case to São Paulo State Appeals Court (Tribunal de Justiça
do Estado de São Paulo). As a consequence of such decision, the injunction granted by the Regional Federal Court of
the Third Region was set aside, and both INCRA and the Federal Government had declined on the claim. Since then, entities providing
notary and registry services located in the State of São Paulo are, over again, exempt from observing certain restrictions
and requirements imposed by Law No. 5,709/71 and Decree No. 74,965/74.



On
June 25, 2014, the AGU and INCRA filed a suit with the Supreme Court (STF) against the State of São Paulo due to the decision
ruled by São Paulo State Appeals Court which judged the Opinion 1 issued by AGU in 2010, unconstitutional. In this suit
the stay of the preliminary order was required and, in the end, the definite annulment of Opinion 461-12-E of the Inspector General
Office of São Paulo, issued on December 3, 2012. On August 7, 2014, the decision issued by Justice Marco Aurélio
Mello, rapporteur of the process, was published, denying the injunction requested by AGU and INCRA, on the basis that the fact
that more than one year and 7 months elapsed since from the issuance of the opinion of the Inspector General Office of São
Paulo and the filing of the suit with STF, showing that there was no urgency in the analysis of the injunction request. In September
2016, Justice Marco Aurélio Mello suspended the effects of said decision issued by the São Paulo Justice Court that
considered that the Opinion issued by the AGU in 2010 as unconstitutional.



In
addition, on April 16, 2015, the Brazilian Rural Society filed a claim for the acknowledgment of non-compliance with basic principles
(ADPF) under certain provisions of the Brazilian Constitution with the Supreme Court in order to (i) declare that the paragraph
1 of article 1 of Law No. 5,709/1971 was not received by the 1988 Federal Constitution and (ii) reverse the opinion of the Federal
Attorney General of 2010 (Opinion No. LA-01).



As
of the date hereof, we are not able to provide an estimate of the timeframe for a final judgment in any of these lawsuits to be
ruled by the STF.





29









| | C. | Organizational Structure
| | -- | ------------------------



The diagram below illustrates
our corporate structure as of the date hereof. All of our subsidiaries are incorporated in Brazil and Paraguay.














| | (1) | A portion of our common shares held by Cresud are deposited
in The Bank of New York Mellon in the form of ADRs (American Depositary Receipts).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Agro Investment and Agro Managers are companies organized
under the laws of Argentina, controlled by Cresud ́s controlling shareholder (Mr. Eduardo Elsztain) and Cresud, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Such shares were acquired and are held as a hedge for
total return swap transactions involving the same number of our common shares entered into between Credit Suisse Securities (Europe)
Limited and Autonomy Master Fund Limited. Autonomy Master Fund Limited is controlled by Autonomy Capital (Jersey) LP, which is
managed by Robert Gibbins, a member of our board of directors. The swap transaction matures on March 25, 2019.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Cape Town LLC is controlled by Mr. Elie Horn.
| | --- | ---------------------------------------------



| | (5) | Other than Mr. Eduardo Elsztain and Mr. Robert Gibbins.
| | --- | -------------------------------------------------------



| | (6) | On February 9, 2018, the spin-off of Cresca was concluded
and the portion of assets and liabilities attributed to the Company was transferred to the wholly-owned subsidiary Moroti.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | D. | Property, Plants and Equipment
| | -- | ------------------------------



See “—History and
Development of the Company—Overview,” “—Business Overview—Agricultural Activities and Products,”
“—Business Overview—Leases,” “—Business Overview—Investment Properties,” “—Business
Overview—Agricultural Properties,” “—Business Overview— Environmental Regulation” and “—Business
Overview—Environmental Licenses.”



ITEM
4A—UNRESOLVED STAFF COMMENTS



There are no unresolved staff comments as of the
date of this annual report.



30







ITEM
5—OPERATING AND FINANCIAL REVIEW AND PROSPECTS



You should read the following
discussion in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this
report. Our audited annual consolidated financial statements have been prepared in accordance with IFRS as issued by IASB.



| | A. | Operating Results
| | -- | -----------------



Business
Drivers and Measures



Brazilian Macroeconomic Environment



Our financial condition and results of operations
are influenced by the Brazilian economic environment.



Brazilian
GDP increased 0.1% in 2014 and decreased 3.8% in 2015, 3.6 % in 2016, increased 1.0% in 2017 and increased 1.8% in the first six
months of 2018. The forecast is a growth in the Brazilian GDP for 2018 and 2019. Inflation, as measured by the Broad Consumer Price
Index, or IPCA, published by the IBGE, was 10.7%, 6.28% and 2.95% per annum in 2015, 2016 and 2017, respectively, and 2.6% in the
first six months of 2018. The dollar appreciated 13.4%, 45.0% against the Real in 2014 and 2015, respectively and depreciated
16.5 % against the Real in 2016. In 2017, the Real depreciated 1.5% against the U.S. dollar. From January 1 through
June 30, 2018, the Real depreciated approximately 18.0% against the U.S. dollar. Unemployment increased from 6.8% in January
2014 to 12.4% in June 2018. International reserves held by the Central Bank of Brazil increased from US$376.7 billion on September
30, 2016 to US$380.7 billion on September 30, 2018.



The long-term credit rating
for Brazil was downgraded by Standard & Poor’s from BBB- to BB-, by Moody’s from “Baa2” to “Ba2”
and by Fitch Ratings from BBB- to BB-, placing Brazil back to speculative investment grade level (“junk”).



The current scenario is
that the external vulnerability of Brazil may grow in the coming years, which may result in a deficit in the current account, since
the entry of direct foreign investments may not be sufficient to cover the foreign debt.



Other Factors Affecting our Business



Market
price variations for commodities: our principal products are subject to changes in commodities prices, including those of indexes
such as the Intercontinental Exchange and the CBOT, exchange rates, as well as other indexes linked to our debts. Commodity prices
are generally influenced by international, domestic and local supply and demand, which are in turn influenced by climactic and
weather conditions, technology, and economic, commercial and political conditions, as well as exchange rates and transportation
costs. For more information, see “Item 3—Key Information—Risk Factors—Risks Relating to our Business and
Industry—Fluctuation in market prices for our agricultural products could adversely affect us” and “— Qualitative
Evaluation of Market Risks.”



Foreign
exchange: a portion of our income (loss) is linked to the exchange rate between the Realand the U.S. dollar, and consequently
our revenue is sensitive to foreign exchange fluctuations. Certain of our commodities, such as soybean, may be priced in Reaisor in U.S. dollars. In addition, certain of the raw materials necessary for farming activities, such as chemicals, pesticides
and fertilizers, are priced in or based on the U.S. dollar. See “Item 3—Key Information—Exchange Rates.



Inflation:
inflation does not directly affect our revenue because our products are commodities whose prices are determined by reference to
international commodity exchanges. Nevertheless, our labor and other operating costs are affected by inflation which directly
affects our results of operations.



The table below sets forth certain market indices that affect our operating and financial results:





|                          |  | Year
Ended June 30, |          |   |      | 
|------------------------- |  | ------------------- | -------- | - | ---- | 
|                          |  | 2018                |          |   | 2017 | 
|Soybean Price (Paranaguá) |  | (R$/bag)            |          |   |      | 
|Closing                   |  |                     | 86.54    |   |      | 
|Exchange rate             |  | (R$ per US$ 1.00)   |          |   |      | 
|Beginning                 |  |                     | 3.30     |   |      | 
|Closing                   |  |                     | 3.85     |   |      | 
|Average                   |  |                     | 3.34     |   |      | 
|ATR (R$/Kg of ATR)(1)     |  |                     | 0.57     |   |      | 
|Closing IGP-M (%)(2)      |  |                     | 6.92     | % |      | 
|IPCA(3)                   |  |                     | 4.39     | % |      | 
|CDI(4)                    |  |                     | 7.35     | % |      | 
|NPK(5) (R$/Ton)           |  |                     | 1,248.62 |   |      | 














| | (1) | ATR or Total Recoverable Sugar corresponds to the quantity
of sugar available in the raw material subtracted from the losses in the industrial process.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | IGP-M: General Index of Market prices is published monthly
by Fundação Getúlio Vargas.
| | --- | --------------------------------------------------------------------------------------



| | (3) | IPCA: National Index of Broad Consumer Prices published
monthly by the Brazilian Statistics Institute (IBGE).
| | --- | -------------------------------------------------------------------------------------------------------------



| | (4) | The CDI rate is the average of the rates of inter-bank
deposits charged during the day in Brazil (accumulated in the period).
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (5) | NPK is the chemical compound of farming fertilizers made
up of nitrogen, phosphorus and potassium combined at a ratio of 2:20:20.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------



Principal Components of Our Statement of Operations



Revenue



Our operating revenue
is derived mainly from the sale of (i) grains (comprised of soybean, corn, and sorghum); (ii) sugarcane; (iii) cattle and (iv)
other farming products.





31









Taxes
on sales



Taxes on sales vary depending on the product and
the market, as follows:



|Tax      |  | Direct Export |  | Sale
    to Importer/Exporter |  | Domestic
    market
|-------- |  | ------------- |  | ----------------------------- |  | -------------------
|ICMS     |  | Not levied    |  | Not levied                    |  | Levied             
|PIS      |  | Not levied    |  | Not levied                    |  | Levied             
|COFINS   |  | Not levied    |  | Not levied                    |  | Levied             
|FUNRURAL |  | Not levied    |  | Levied                        |  | Levied             



These are the primary taxes on sales:



ICMS (Value-Added
Tax on Sales and Services): ICMS is a state tax levied on the price of a product at an average rate of 18% for transactions
within a state and 7% to 12% for transactions across states. ICMS payments are not applicable to exports of goods and services.



Federal
Social Integration Program (Programa de Integração Social, or PIS)and Social Security Financing Contribution
(Contribuição para o Financiamento da Seguridade Social, or COFINS): PIS and COFINS tax payments, levied at
(i) 0.65% and 3.0% of gross revenue, respectively (cumulative) or (ii) 1.65% and 7.6%, respectively, after certain deductions (non-cumulative),
depending on the business conducted and the nature of revenue earned, among other factors. PIS and COFINS payments are not applicable
to exports of goods and services, or sales to import/export companies located in Brazil. Since we sell the entirety of our soybean
production to such companies, such activities are not subject to PIS or COFINS payments. Brazilian law also exempts PIS and COFINS
payments upon the sale of sugarcane used for the production of ethanol or biofuel, sale of maize to rural producers and manufacturers
of animal feed and food and the sale of cattle.



Rural
Workers Assistance Fund (Fundo do Produtor Rural, or FUNRURAL): Agricultural producers are subject to a tax of 2.3% to 2.85%,
levied on total output sold. The FUNRURAL tax is not payable on exports of goods and services, but applies on direct sales to import/export
companies located in Brazil.



Gain
(loss) on sale of farms



Upon
the sale of investment property, such as our farms, we recognize in the statement of operations a gain (loss) for the difference
between the sale proceeds and the carrying amount of the property sold. We account for our investment properties at cost.



Changes
in fair value of biological assets



Our
biological assets consist mainly of the cultivation of soybean, corn, sorghum, sugarcane and cattle raising (see livestock), which
are measured at fair value less cost to sell.



The
fair value of biological assets is determined upon their initial recognition and at each subsequent balance sheet date. Gains and
losses arising from the changes in fair value of biological assets is determined as the difference between fair value and the costs
incurred in the plantation and treatment of crops of biological assets at the balance sheet date, and are recorded in the statement
of operations in “Changes in fair value of biological assets.” In certain circumstances, the estimated fair value less
cost to sell approximate cost incurred at that moment, especially when only a minor biological transformation has taken place or
when no material impact is expected from that biological transformation on the price. Biological assets continue to be recorded
at their fair value.



The
sugarcane crop productive cycle is five years on average, and for a new cycle to start depends on the completion of the previous
cycle. In this regard, the current cycle is classified as biological asset in current assets, and the amount of the constitution
of the bearer plant (bearer of the other cycles) are classified as permanent culture in property, plant and equipment. The calculation
to estimate the value of the biological asset “sugarcane” was the discounted cash flow at a rate reflecting the risks
and the terms of the operation. As such, we projected the future cash flows in accordance with the projected productivity cycle,
taking into consideration the estimated useful life of each area, the prices of total sugar recoverable, estimated productivity
and the related estimated costs of production, including the cost of land, harvest, loading and transportation for each hectare
planted. The soybean, corn and sorghum are temporary cultures, in which the agricultural product is harvested after a period of
time spanning from 110 to 180 days after the planting date, depending on the cultivation, variety, geographic location and climate
conditions. The calculation methodology used to estimate the value of the grains was the discounted cash flows at a rate reflecting
the risk and terms of operations. As such, we projected the future cash flows taking into consideration the estimated productivity,
costs to be incurred based on the Company’s budget or on new internal estimates and market prices. The commodities’
prices available in futures markets, were obtained from quotes on the following boards of trade: CBOT (“Chicago Board of
Trade”), BM&F (Bolsa de Mercadorias e Futuros), and NYBOT (“New York Board of Trade”). For the agricultural
products not quoted in these markets, we used the prices obtained through direct market surveys or disclosed by specialized companies.
We considered the related logistic expenses and tax discounts in order to arrive at the prices of each of these products in each
production unit of the Company.



As
mentioned above, the fair value of the biological assets disclosed in the balance sheet was determined using valuation techniques
– the discounted cash flows method. The data used in these methods is based on the information observed in the market, whenever
possible, and if unavailable, a certain level of judgment is required to establish such fair value. Judgment is used the data to
be used, e.g. price, productivity and production cost. Changes in the assumptions on these inputs might affect the fair value of
biological assets.



Livestock



In
2016 the we began cattle raising operations, which typically consists of producing and selling beef calves after weaning, which
characterizes the activity as breeding.



For
segregation purposes, when applicable, the Company classifies its cattle herd into: beef cattle (current assets), which can be
sold as a biological asset for meat production; and dairy cattle (non-current assets), which is used in farm operations to generate
other biological assets. Up to the reporting date the Company only had beef cattle, which includes calves, heifers, cows and bulls.



The
fair value of beef cattle is determined based on market prices, given the existence of an active market. Gain or loss from changes
in the fair value of beef cattle is recognized in profit or loss for the period. The Company considered the prices in the cattle
market in Bahia state and the metrics used in the market. Accordingly, beef and dairy cattle are measured based on arroba and the
age bracket of animals.





32









Adjustment
to net realizable value of agricultural products after harvest



Agricultural
products from biological assets are measured at fair value when they are ready to be harvested, less selling expenses, when they
are reclassified from biological assets to inventories.



A provision for adjustment
of agricultural products to net realizable value is recognized when the fair value recorded in inventories is higher than the net
realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs
to sell. Adjustments to net realizable value are recognized in the statement of operations in “Adjustment of net realizable
value of agricultural products after harvest.”



Cost
of sales



Cost
of sales for sugarcane and grains includes: (i) the historical cost of the inventories including costs of raw materials such as
seeds, fertilizers, pesticides, fuels and lubricants, as well as labor, maintenance of machines and agricultural equipment, depreciation
and amortization and (ii) the difference between such historical cost and the fair value of the grains and sugarcane at the time
of harvest.



Operating
expenses



| | ● | Selling expenses: selling expenses refer mainly to shipping, storage, commissions, classification of products and other
related expenses.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | ● | General and administrative expenses: general and administrative expenses refer mainly
to personnel, legal counsel, depreciation and amortization, lease payments and expenses related to our headquarters.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Financial
income and expenses



Financial income and expenses
consist mainly of interest from financial investments, foreign exchange variations, monetary variations, interest on financial
assets and liabilities and realized and unrealized gains (losses) with derivative financial instruments.



Income
and social contribution-current and deferred taxes



Current
and deferred income and social contribution taxes refer to taxes on net profits. We and our subsidiaries Jaborandi Agrícola
Ltda. and Cremaq Ltda. assess such taxes under the taxable income regime, with a maximum rate of 34%, consisting of: (i) income
tax, at a rate of 15% of profits; (ii) income tax surcharge of 10% levied upon profits exceeding R$240,000 per year; (iii) social
contribution tax on net profit, at a rate of 9%; and (iv) deferred income and social contribution taxes.



Our
other subsidiaries assess such taxes under the presumed profit regime under which the tax base is computed as a percentage of revenue.
This consists of income and social contribution taxes at a rate of 15% (plus a 10% surcharge for amounts exceeding R$240,000 per
year) and 9%, respectively, levied on (i) 8% and 12%, respectively, of property sales; (ii) 32% of leases and services; and (iii)
other revenue and capital gains.



Critical
Accounting Policies and Estimates



Our
discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements,
which have been prepared in accordance with IFRS. We summarize our significant accounting policies, judgments and estimates in
Note 2 to our audited consolidated financial statements.



The
critical accounting policies described herein are important to the presentation of our financial condition and results of operations,
requiring the most difficult, subjective and complex judgments by our management, often as a result of the need to make estimates
and assumptions about matters that are inherently uncertain. While preparing our financial statements, our management uses estimates
and assumptions to record assets, liabilities and transactions. Our financial statements include different subjective and complex
estimates regarding, among others, accounting for revenue recognition for grains and farm sales and related accounts receivable,
determining the fair value of derivatives, biological assets and accounting for investments in investment properties, warrant,
residual value and useful life of property, plant and equipment, deferred taxes, share base payment and legal claims. In order
to provide a better understanding of how our management makes its judgments about future events, including the variables and assumptions
underlying such estimates, we have identified the following critical accounting policies.



Fair
value of biological assets



The
fair value of biological assets is determined using valuation techniques, including the discounted cash flows method. The inputs
for estimates are based on market information, whenever possible, and when such inputs are not available, a certain level of judgment
is required to estimate the fair value. Judgment involves, for example, price, productivity, crop cost and production cost. Changes
in the assumptions involving any of these factors may affect the fair value calculations of biological assets.



With regard to cattle, the Company values its
breeding stock at fair value based on market price for the region.



Residual value and useful life of property, plant and
equipment and investment properties



The value and useful life
of assets are assessed and adjusted when necessary at the end of each reporting period. The carrying amount of the asset is immediately
reduced to its recoverable value if the carrying amount is estimated to exceed the recoverable value.



Legal
claims



We
are party to judicial and administrative lawsuits, as described in Item 8-Financial Information-Legal Proceedings. Provisions are
recorded for contingencies related to judicial lawsuits that are estimated to represent probable losses (present obligations resulting
from past events where an outflow of resources is probable and can be reliably estimated). The evaluation of the probability of
loss includes the opinion of external legal advisors. Management believes that these contingencies are properly recorded and presented
in the financial statements.





33







Revenue
recognition



We
recognize our revenue when the amount of revenue can be reliably measured, is probable that future economic benefits will flow
to the entity and when specific criteria have been met for each of our activities. We perform our estimations based on historical
results, taking into consideration the type of customer, the type of transaction and the specifics of each sale.



Sale
of goods



Our
revenue from grain and sugarcane sales is recognized when the significant risks and benefits of ownership of the goods are transferred
to the purchaser, usually when the products are delivered to the purchaser at a certain location, according to the agreed sales
terms.



In
the case of grains, we normally perform forward contracts where the price is set up by us for the total or partial volume of grains
to be sold at the delivery date, based on the calculations agreed on the selling contracts. Certain selling contracts are established
in U.S. dollars where the amount in Reais is also established based on the foreign exchange rate according to the sale
terms. The price can also be adjusted by other factors, such as humidity and other technical characteristics of grains. Upon the
grains delivery, the revenue is recognized based on the price established with each purchaser considering the foreign exchange
rate on the delivery date. After the grains are delivered to the addressee, the quality and final weight are evaluated, thus determining
the final price of the transaction, and adjusting the contractual amounts in accordance with such factors as well as by the foreign
exchange rate variation up to the settlement date.



As
for the sale of sugarcane, the Company generally enters into sales contracts for future delivery where data such as volume and
minimum ATR are pre-fixed. The price of sugarcane takes into account the amount of ATR per ton of sugar cane delivered, and the
value of the ATR, released monthly by CONSECANA.



Sale
of farms



Sales
of farms are not recognized as revenue until (i) the sale is completed, (ii) we determine that it is probable the buyer will pay,
(iii) the amount of revenue can be measured reliably, and (iv) we have transferred all risks and rewards to the buyer. The result
from sales of farms is presented in the statement of operations as “Gain on sale of farm” at net value of the related
cost.



Revenue
from leasing of land



The
revenues from operating lease of land are recognized on a straight-line basis over the leasing period. When the lease price is
defined in quantities of agricultural products or livestock, the lease amount is recognized considering the price of the agricultural
product or livestock effective at the balance sheet date or at the date established in contract. The amounts received in advance
as leasing, where applicable, are recognized in current liabilities. Leasing revenues in which a significant portion of the risks
and benefits of ownership are retained by the lessor are classified as operating leases.



Investment
properties



The
land of rural properties purchased by us is measured at acquisition cost, which does not exceed its net realizable value and is
presented in “Non-current assets.” The fair value of the investment properties are obtained through valuation reports
of the farms prepared by internal experts. The valuation is carried out according to market practices. Certain factors such as
location, type of soil, climate of the region, calculation of the improvements, presentation of the elements and calculation of
the land value are all taken into account during the valuation process.



Deferred
income and social contribution taxes



Deferred
income and social contribution taxes are calculated to take into account all tax timing differences as follows: (1) income or
expenses which are not yet taxable or deductible, such as gain on fair value of biological assets and provisions for contingencies,
respectively; and (2) tax loss carryforwards, which have no expiration, when realization or recovery in future periods is considered
probable.



Deferred
tax assets are generated under the taxable income regime only, based on our business plan. The business plan includes consideration
of a variety of factors including the 30% annual limitation for utilizing tax loss carryforwards and changes in the Brazilian
economic conditions. We evaluate whether a valuation allowance is required for these assets and deferred tax assets are recognized
only to the extent that is probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilized, otherwise a valuation allowance is recorded. We also include
in our evaluation the limitation of utilizing up to only 30% of annual taxable income in connection with recognition of tax loss
carryforwards.



Fair
value of financial instruments



When
the fair value of the financial assets and liabilities presented in the balance sheet cannot be obtained in the active market,
it is determined using valuation techniques, including the discounted cash flow method. The data for such methods is based on
those practiced in the market, when possible; however, when it is not viable, a certain level of judgment is required to establish
the fair value. The judgment includes considerations on the data used, such as liquidity risk, credit risk, and volatility. Changes
in the assumptions about these factors may affect the presented fair value of financial instruments.



Transactions
with share-based payment



We
measure the cost of transactions to be settled with shares with employees based on the fair value of equity instruments on the
grant date. The estimate of the fair value of share-based payments requires the determination of the most adequate pricing model
to grant equity instruments, which depends on the grant terms and conditions. It also requires the determination of the most adequate
data for the pricing model, including the expected option life, volatility and dividend yield, and the corresponding assumptions.





34







New
standards, alterations and interpretations of standards



At
the date of this annual report, the following amendments in IFRS had been issued but are not yet effective:



| | ● | IFRS
                                         16 – Leases: IFRS 16 was issued in January 2016 and replaces IAS 17 –
| | - | -------------------------------------------------------------------------------------------------------------------



Leases, IFRIC 4 – Determining Whether an Arrangement Contains a Lease, SIC-15 –
                                         Operating leases – Incentives, and SIC-27 – Evaluating the Substance of Transactions
                                         in the Legal Form of a Lease. IFRS 16 establishes the principles for recognition, measurement,
                                         presentation and disclosure of leases and requires that lessees book all leases using
                                         a single model in the balance sheet, similar to the accounting of financial leases under
                                         IAS 17.



The
Company applies IFRS 16 for annual periods beginning on January 1, 2019. Lessees may choose to adopt the standard using a complete
retrospective application or a modified retrospective application. The temporary provisions of the standard allow certain exemptions.



The
Company performed a preliminary analysis and concluded that the standard should produce impacts on its financial statements. The
quantitative analysis of the potential effect of IFRS 16 on its financial statements will be made during the fiscal year ending
on June 30, 2019, considering this standard will be adopted on July 1, 2019.



| | ● | IFRIC
                                         Interpretation 23 Uncertainty over Income Tax Treatment.
| | - | -------------------------------------------------------------------------------------------------------



The
Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application
of IAS 12 and does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating
to interest and penalties associated with uncertain tax treatments.



The
Interpretation specifically addresses the following: (i) whether an entity considers uncertain tax treatments separately; (ii)
the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines
taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes
in facts and circumstances.



An
entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain
tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The Interpretation is
effective for annual reporting periods beginning on or after January 1, 2019, but certain transition reliefs are available. The
Company will apply the Interpretation from its effective date. The Company is assessing the potential effect of the amendments
on its consolidated financial statements.



The
following standards and amendments are already effective for the Company’s fiscal year beginning on July 1, 2018:



| | ● | IFRS
                                         9 – Financial Instruments: The ultimate aim of this standard is to replace
                                         IAS 39 –
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Financial Instruments: Recognition and Measurement. The key changes
                                         expected are: (i) all financial assets must initially be recognized at their fair value;
                                         (ii) the standard classifies all financial assets, which are currently under IAS 39,
                                         into two groups: amortized cost and fair value; (iii) available for sale and held to
                                         maturity categories of IAS 39 were eliminated; and (iv) the concept of embedded derivatives
                                         in IAS 39 was replaced by the concepts provided in the new standard. The standard is
                                         applicable for fiscal years beginning on January 1, 2018.



Starting
July 1, 2018, the Company applies IFRS 9 – Financial Instruments as the basis for recognition, classification and measurement
of financial instruments.



The
main aspects of the new standard applicable to the Company are described below:



| | i. | Classification
and measurement of financial assets
| | -- | --------------------------------------------------



IFRS
9 contains a new approach for the classification and measurement of financial assets that reflect the business model under which
assets and their cash flow characteristics are managed. It contains three main categories to classify financial instruments: measured
at amortized cost, at fair value through other comprehensive income, and at fair value through profit or loss. The standard eliminates
the categories existing in IAS 39 of financial instruments held to maturity, loans and receivables and financial instruments available
for sale. This change of nomenclature does not alter how financial instruments are subsequently measured; it only impacts the
disclosure of financial instruments by category in the financial statements.



| | ii. | Impairment
| | --- | ----------



The
new standard replaced the “incurred losses” model of IAS 39 for a prospective model of “expected credit losses.”
This will require significant judgment on how changes in economic factors affect expected credit losses. Such provisions will
be measured in credit losses expected for 12 months and credit losses expected for the lifetime of the asset, that is, credit
losses that result from all possible default events throughout the expected life of a financial instrument.



The
Company applied the simplified approach of IFRS 9 – Financial Instruments to measure the credit losses expected throughout
the expected life of the financial instrument.



During
the year, the Company carried out a detailed evaluation of the impact of IFRS 9 aspects. The conclusion of the evaluation is that
there is no relevant impact on the adoption of IFRS 9 on impairment of financial asstes due to the fact that the Company already
analysis each client individualy for expected losses and the level of overdue receivables is not relevant.



| | ● | IFRS
                                         15 – Revenue from Contracts with Customers:
| | - | -----------------------------------------------------------------------------------------



The new standard was issued
                                         in May 2014, amended in April 2016, and establishes a five-step model to account for
                                         revenues from agreements with clients. According to IFRS 15, revenue is recognized for
                                         a value that reflects the consideration to which an entity expects to be entitled in
                                         exchange for the transfer or goods or services to a client. The new standard on revenue
                                         will replace all current requirements for recognition of revenue in accordance with IFRS.



Starting
from July 1, 2018, the Company adopts IFRS 15 – Revenue from Contracts with Customers.



The
complete retrospective application or modified retrospective application of the standard were required for annual periods starting
from January 1, 2018. The Company plans to adopt the new standard on the required date based on the modified retrospective method.





35







The
new standard provides the principles to be applied by an entity to determine the measurement of revenue and how and when it must
be recognized, based on five steps: (i) identification of the agreements with clients; (ii) identification of the performance
obligations envisaged in the agreements; (iii) determination of the transaction price; (iv) allocation of the transaction price
to the performance obligations envisaged in the agreements; and (v) recognition of revenue when the performance obligation is
fulfilled.



The
changes establish the criteria for measurement and registration of sales, as they were effectively made with due presentation,
as well as registration of the values to which the Company is entitled in the operation, considering any estimates of impairment
loss.



In
preparing to adopt IFRS 15, the Company considered the following:



| | i. | Sales
                                         of agricultural products
| | -- | -----------------------------------------------------------------------



For
contracts with customers in which the sale of agricultural products is generally expected to be the only performance obligation,
adoption of IFRS 15 is not expected to have any impact on the Company’s revenue and profit or loss. The Company expects
the revenue recognition to occur at a point in time when control of the agricultural products is transferred to the customer,
generally on delivery.



| | ii. | Sales
                                         of farms
| | --- | -------------------------------------------------------



For
sales of land, revenue is recognized when risks and benefits of ownership of the land is transferred to the customer. This is
considered to be the only performance obligation and therefore, according to IFRS 15, revenue is recognized at a point in time,
generally when possession of the land is granted to the customer.



| | iii. | Presentation
                                         and disclosure requirements
| | ---- | ---------------------------------------------------------------------------------



The
presentation and disclosure requirements in IFRS 15 are more detailed than under current IFRS. The presentation requirements represent
a significant change from current practice and increases the volume of disclosures required in the Company’s financial statements.
As required by IFRS 15, the Company will disaggregate revenue recognized from contracts with customers into categories that depict
how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. It will also disclose
information about the relationship between the disclosure of disaggregated revenue and revenue information disclosed for each
reportable segment.



The
Company and its subsidiaries analyzed the new standard and identified no relevant impacts on their financial statements, except
a higher level of disclosures, considering the nature of their sale transactions, in which performance obligations are clear,
transaction price definition and the transfer of control over assets is not complex (it is made to the extent the ownership and
benefit, are transferred to the beneficiaries based on defined market prices).



| | ● | IFRS
                                         2 – Clarifications of classification and measurement of share-based payment
                                         transactions –
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Amendments. The IASB issued amendments to IFRS 2 Share-based
                                         Payment that address three main areas: the effects of vesting conditions on the measurement
                                         of a cash-settled share-based payment transaction; the classification of a share-based
                                         payment transaction with net settlement features for withholding tax obligations; and
                                         accounting where a modification to the terms and conditions of a share-based payment
                                         transaction changes its classification from cash settled to equity settled.



On
adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted
if elected for all three amendments and other criteria are met. The amendments are effective for annual periods beginning on or
after January 1, 2018, with early application permitted. The Company does not expect any impacts on its consolidated financial
statements.



| | i. | Transfers
                                         of Investment Property — Amendments to IAS 40
| | -- | ------------------------------------------------------------------------------------------------



The
amendments clarify when an entity should transfer property, including property under construction or development into, or out
of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition
of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use
of a property does not provide evidence of a change in use. Entities should apply the amendments prospectively to changes in use
that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity
should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions
that exist at that date.



Retrospective
application in accordance with IAS 8 is only permitted if it is possible without the use of hindsight. Effective for annual periods
beginning on or after January 1, 2018. Early application of the amendments is permitted and must be disclosed. The Company will
apply amendments when they become effective. However, since the current practice is in line with the clarifications issued, the
Company does not expect any effect on its consolidated financial statements.



| | ii. | IFRIC
                                         Interpretation 22 Foreign Currency Transactions and Advance Consideration
| | --- | ------------------------------------------------------------------------------------------------------------------------



The
Interpretation clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense
or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration,
the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability
arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine
the transaction date for each payment or receipt of advance consideration. Entities may apply the amendments on a fully retrospective
basis.



Alternatively,
an entity may apply the Interpretation prospectively to all assets, expenses and income in its scope that are initially recognized
on or after: (i) the beginning of the reporting period in which the entity first applies the interpretation; or (ii) the beginning
of a prior reporting period presented as comparative information in the financial statements of the reporting period in which
the entity first applies the interpretation.





36







The
Interpretation is effective for annual periods beginning on or after January 1, 2018. Early application of interpretation is permitted
and must be disclosed. However, since the current practice is in line with the Interpretation, the Company does not expect any
effect on its consolidated financial statements.



JOBS
Act



On
April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain requirements
for qualifying public companies.



Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions,
we may not be required to, among other things, provide an auditor’s attestation report on our internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act to comply with any PCAOB rules, that, if adopted in the future, would
require mandatory audit firm rotation and auditor discussion and analysis pursuant to any future audit rule promulgated by the
PCAOB. These exemptions apply until we are no longer an “emerging growth company.” The JOBS Act also provides “emerging
growth companies” an election to comply with new or revised accounting standards on a delayed basis for those standards
that have a different effective date for public and private companies. However, such election is limited to companies that prepare
their financial statements and report in accordance with accounting principles generally accepted in the United States of America.
As our financial statements are prepared in accordance with IFRS, such accommodation is not available to us, and we will be required
to apply new or revised accounting standards under IFRS as from the effective date established in the corresponding standard.



Results
of Operations



The
following discussion of our results of operations is based on our consolidated financial statements prepared in accordance with
IFRS. The discussion of the results of our business segments is based upon financial information reported for each of the segments
of our business, as presented in the table below.



The
following tables set forth operating results of each of our segments and the reconciliation of these results to our consolidated
statement of operations.



|                                                                                 |  | Year Ended June 30, 2018 |         
|-------------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                                 |  | (R$ thousands)           |         
|                                                                                 |  |                          |         
|                                                                                 |  | Total                    |         
|Net revenue                                                                      |  |                          | 244,278 
|Gain from sale of farm                                                           |  |                          | 39,817  
|Gain (loss) on fair value of biological assets and agricultural products         |  |                          | 99,083  
|(Impairment) of net realizable value of agricultural products after harvest, net |  |                          | 883     
|Cost of sales                                                                    |  |                          | (228,319
|Gross profit                                                                     |  |                          | 155,742 
|                                                                                 |  |                          |         
|Operating income (expenses)                                                      |  |                          |         
|Selling expenses                                                                 |  |                          | (10,087 
|General and administrative expenses                                              |  |                          | (34,945 
|Other operating income                                                           |  |                          | 35,432  
|Equity pickup                                                                    |  |                          | 14,671  
|Operating income (loss)                                                          |  |                          | 160,813 
|                                                                                 |  |                          |         
|Net financial income                                                             |  |                          |         
|Financial income                                                                 |  |                          | 129,323 
|Financial expenses                                                               |  |                          | (137,879
|Income (loss) before taxes                                                       |  |                          | 152,257 
|                                                                                 |  |                          |         
|Income and social contribution taxes                                             |  |                          | (25,919 
|                                                                                 |  |                          |         
|Net income (loss) for the year                                                   |  |                          | 126,338 



37







|                                                                                 |  | Year Ended June 30, 2017 |         
|-------------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                                 |  | (R$ thousands)           |         
|                                                                                 |  |                          |         
|                                                                                 |  | Total                    |         
|Net revenue                                                                      |  |                          | 146,911 
|Gain from sale of farm                                                           |  |                          | 26,716  
|Gain (loss) on fair value of biological assets and agricultural products         |  |                          | 12,266  
|(Impairment) of net realizable value of agricultural products after harvest, net |  |                          | (1,655  
|Cost of sales                                                                    |  |                          | (136,362
|                                                                                 |  |                          |         
|Gross profit                                                                     |  |                          | 47,876  
|                                                                                 |  |                          |         
|Operating income (expenses)                                                      |  |                          |         
|Selling expenses                                                                 |  |                          | (6,676  
|General and administrative expenses                                              |  |                          | (30,941 
|Other operating expenses                                                         |  |                          | (6,019  
|Equity pickup                                                                    |  |                          | (4,425  
|                                                                                 |  |                          |         
|Operating income (loss)                                                          |  |                          | (185    
|                                                                                 |  |                          |         
|Net financial income                                                             |  |                          |         
|Financial income                                                                 |  |                          | 110,090 
|Financial expenses                                                               |  |                          | (76,646 
|                                                                                 |  |                          |         
|Income (loss) before taxes                                                       |  |                          | 33,259  
|                                                                                 |  |                          |         
|Income and social contribution taxes                                             |  |                          | (5,949  
|                                                                                 |  |                          |         
|Net income (loss) for the year                                                   |  |                          | 27,310  



|                                                                                 |  | Year Ended June 30, 2016 |         
|-------------------------------------------------------------------------------- |  | ------------------------ | --------
|                                                                                 |  | (R$ thousands)           |         
|                                                                                 |  |                          |         
|                                                                                 |  | Total                    |         
|Net revenue                                                                      |  |                          | 147,128 
|Gain from sale of farm                                                           |  |                          | —       
|Gain (loss) on fair value of biological assets and agricultural products         |  |                          | (12,632 
|(Impairment) of net realizable value of agricultural products after harvest, net |  |                          | 659     
|Cost of sales                                                                    |  |                          | (134,714
|                                                                                 |  |                          |         
|Gross profit                                                                     |  |                          | 441     
|                                                                                 |  |                          |         
|Operating income (expenses)                                                      |  |                          |         
|Selling expenses                                                                 |  |                          | (2,732  
|General and administrative expenses                                              |  |                          | (28,944 
|Other operating expenses                                                         |  |                          | 2,812   
|Equity pickup                                                                    |  |                          | (511    
|                                                                                 |  |                          |         
|Operating income (loss)                                                          |  |                          | (28,934 
|                                                                                 |  |                          |         
|Net financial income                                                             |  |                          |         
|Financial income                                                                 |  |                          | 192,644 
|Financial expenses                                                               |  |                          | (154,270
|                                                                                 |  |                          |         
|Income (loss) before taxes                                                       |  |                          | 9,440   
|                                                                                 |  |                          |         
|Income and social contribution taxes                                             |  |                          | (1,451  
|                                                                                 |  |                          |         
|Net income (loss) for the year                                                   |  |                          | 7,989   



The
table below shows a summary of our statement of operations for the years indicated.



|                                                                                              |  | Year Ended June 30,                                    |           
|--------------------------------------------------------------------------------------------- |  | ------------------------------------------------------ | ----------
|                                                                                              |  | 2018                                                   |           
|                                                                                              |  | (R$ thousands, except share and per share information) |           
|CONSOLIDATED STATEMENT OF OPERATIONS                                                          |  |                                                        |           
|Net revenue                                                                                   |  |                                                        | 244,278   
|Gain on sale of farms                                                                         |  |                                                        | 39,817    
|Changes in fair value of biological assets and agricultural products                          |  |                                                        | 99,083    
|Adjustments to impairment of net realizable value of agricultural products after harvest, net |  |                                                        | 883       
|Cost of sales                                                                                 |  |                                                        | (228,319  
|Gross profit                                                                                  |  |                                                        | 155,742   
|Selling expenses                                                                              |  |                                                        | (10,087   
|General and administrative expenses                                                           |  |                                                        | (34,945   
|Other operating income (expenses) net                                                         |  |                                                        | 35,432    
|Share of profit (loss) of a joint venture                                                     |  |                                                        | 14,671    
|Operating income (loss)                                                                       |  |                                                        | 160,813   
|Financial income                                                                              |  |                                                        | 129,323   
|Financial expenses                                                                            |  |                                                        | (137,879  
|Financial (expense) income, net                                                               |  |                                                        | (8,566    
|Profit (loss) before income and social contribution taxes                                     |  |                                                        | 152,257   
|Income and social contribution taxes                                                          |  |                                                        | (25,919   
|Profit (loss) for the year                                                                    |  |                                                        | 126,338   
|Profit (loss) attributable to equity holders of the parent                                    |  |                                                        | 126,338   
|Issued shares at the fiscal year end                                                          |  |                                                        | 56,888,916
|Basic earnings (loss) per share                                                               |  |                                                        | 2.35      
|Diluted earnings (loss) per share                                                             |  |                                                        | 2.35      



Year
Ended June 30, 2018 Compared to Year Ended June 30, 2017



Net
revenue



Net
revenue increased R$97.4 million from R$146.9 million for the year ended June 30, 2017 to R$244.3 million for the year ended June
30, 2018. This increase was mainly due to the following:



| | i. | Revenue
                                         from sugarcane sales: revenue from sugarcane sales increased R$64.4 million from
                                         R$73.7 million (reflecting sales of 865,384 tons at an average price of R$85.31 per ton)
                                         for the year ended June 30, 2017 to R$138.1 million (reflecting sales of 1,681,530 tons
                                         at an average price of R$85.15 per ton) for the year ended June 30, 2018. This represents
                                         an increase of 87.5% over the previous year, mainly resulting from the increase in sales
                                         volume, partially offset by a decrease in average per-ton sugarcane sales price. The
                                         increase in sugarcane sales was mainly due to an increase in hectares planted due to
                                         the incorporation of 12,235 hectares of the São José Farm. The decrease
                                         in average per-ton sugarcane sales price was due to a 2.8% decrease in the CONSECANA
                                         (sugarcane price index in Brazil), from R$0.625/kg for the year ended June 30, 2017 to
                                         R$0.607/kg for the year ended June 30, 2018.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





38







| | ii. | Revenue
                                         from grain sales: revenue from grain sales increased R$28.2 million from R$69.0 million
                                         for the year ended June 30, 2017 (reflecting sales of 62,977 tons at an average price
                                         of R$1,095.18 per ton) to R$97.2 million for the year ended June 30, 2018 (reflecting
                                         sales of 105,320 tons at an average price of R$922.7 per ton). This represented an increase
                                         of 40.9% over the previous year resulting from an increase in sales volume partially
                                         offset by a decrease in sales price, represented mainly by revenues from soybean and
                                         corn sales, as explained below:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Revenue
                                         from soybean sales: revenue from soybean sales increased R$20.5 million from R$63.3
                                         million (reflecting sales of 51,262 tons at an average price of R$1,234.54 per ton) for
                                         the year ended June 30, 2017 to R$83.8 million (reflecting sales of 74,237 tons at an
                                         average price of R$1,124.02 per ton) for the year ended June 30, 2018. This represents
                                         an increase of 32.4% over the previous year resulting from an increase in sales volume,
                                         which was a result of the increase in number of hectares planted mainly due to the incorporation
                                         of 5,302 hectares of the São José Farm.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Revenue
                                         from corn sales: revenue from corn sales increased R$7.9 million from R$5.5 million
                                         (reflecting sales of 11,715 tons at an average price of R$467.45 per ton) for the year
                                         ended June 30, 2017 to R$13.4 million (reflecting sales of 31,083 tons at an average
                                         price of R$431.10 per ton) for the year ended June 30, 2018. This represents an increase
                                         of 144.7% over the previous year, resulting from an increase in sales volume, which was
                                         a result of the increase in productivity from 5,457 kg/hectare for the year ended June
                                         30, 2017 to 7,598 kg/hectare for the year ended June 30, 2018.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
table below shows a summary of the number of hectares harvested, productivity and revenues from grain and sugarcane production:



|          |  |  | Harvest (hectares) |        |  | Productivity (tons) |  |        | Revenue (R$ thousands) | 
|--------- |  |  | ------------------ | ------ |  | ------------------- |  | ------ | ---------------------- | 
|          |  |  | 2018               |        |  | 2017                |  |        | 2018                   | 
|Grain     |  |  |                    | 35,207 |  |                     |  | 30,139 |                        | 
|Sugarcane |  |  |                    | 25,452 |  |                     |  | 13,217 |                        | 



Gain
on sale of farms



For
the year ended June 30, 2018, we sold 956 hectares of the Araucária Farm in the State of Goiás for R$52.4 million
with a cost of R$12.6 million, including indirect taxes. For the year ended June 30, 2017, we sold 2,259 hectares of the Araucária
and Jatobá farms in the State of Goiás and Bahia, respectively for R$32.0 million with a cost of R$9.1 million.
In addition, a total of R$3.8 million was recorded in the year ended June 30, 2018 related to the sale of Fazenda Cremaq in 2015,
relating to an area of 6,020 hectares that was in the process of a geo-referencing dismemberment which caused registration of
the real estate to be pending. Once the registration was effected, the amount was released.



Changes
in fair value of biological assets and agricultural products



Changes
in fair value of biological assets and agricultural products varied R$86.8 million from a gain of R$12.3 million for the year
ended June 30, 2017 to a gain of R$99.1 million for the year ended June 30, 2018. This variation resulted mainly from the increase
in the fair value of biological assets and agricultural products of grains from a gain of R$4.3 million for the year ended June
30, 2017 to a gain of R$54.9 million for the year ended June 30, 2018. Such variation was mainly due to an increase in the soybean
and corn yields in relation to the previous year. In addition, the fair value of biological assets and agricultural products of
sugarcane changed from a gain of R$11.5 million for the year ended June 30, 2017 to a gain of R$43.9 million for the year ended
June 30, 2018. Such variation was a result of the increase in number of hectares planted due to the incorporation of 12,235 hectares
of the São José Farm and also the CCT (Cutting, Loading, and Transportation) costs which were paid by the previous
owner.



Adjustments
to net realizable value of agricultural products after harvest



We
recognized an impairment of net realizable value of agricultural products after harvest of R$1.7 million for the year ended June
30, 2017. For the year ended June 30, 2018, we recognized a reversal of impairment of net realizable value of agricultural products
after harvest of R$0.9 million. Such variations resulted from the increase in the corn and soybean prices from the harvest time
to the end of the respective fiscal year.



Cost
of sales



Cost
of sales increased R$91.9 million from R$136.4 million for the year ended June 30, 2017 to R$228.3 million for the year ended
June 30, 2018. Changes in costs year-over-year are directly linked to the market prices of commodities at the time of harvest
as well as the harvested volumes (tons), as explained below:



| | i. | Cost
                                         of soybean sold: the cost of soybean sold increased by R$26.5 million. Our average
                                         cost per ton of soybean sold increased 3.5% from R$1,036.61 per ton (corresponding to
                                         51,262 tons at a total cost of R$53.1 million) for the year ended June 30, 2017 to R$1,073.32
                                         per ton (corresponding to 74,237 tons at a total cost of R$79.7 million) for the year
                                         ended June 30, 2018.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | Cost
                                         of corn sold: the cost of corn sold increased by R$4.2 million. Our average cost
                                         per ton of corn sold decreased 34.4% from R$488.32 per ton (corresponding to 11,715 tons
                                         at a total cost of R$5.7 million) for the year ended June 30, 2017 to R$320.21 per ton
                                         (corresponding to 31,083 tons at a total cost of R$9.9 million) for the year ended June
                                         30, 2018.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | Cost
                                         of sugarcane sold: the cost of sugarcane increased by R$59.5 million. Our average
                                         cost per ton of sugarcane sold decreased 7.4% from R$86.09 per ton (corresponding to
                                         865,384 tons at a total cost of R$74.5 million) for the year ended June 30, 2017 to R$79.71
                                         per ton (corresponding to 1,681,530 tons at a total cost of R$134.0 million) for the
                                         year ended June 30, 2018.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





39







Gross
profit



For
the reasons mentioned above, our gross profit for the year ended June 30, 2018 was R$155.7 million, representing an increase of
R$107.8 million as compared to R$47.9 million for the year ended June 30, 2017.



Selling
expenses



Selling
expenses increased R$3.4 million from R$6.7 million for the year ended June 30, 2017 to R$10.1 million for the year ended June
30, 2018, primarily as a result of the increase in freight expenses, which reflects the amount of grain sold in the period, from
R$2.3 million for the year ended June 30, 2017 to R$4.4 million for the year ended June 30, 2018 and the increase in storage and
processing expenses due to the incorporation of a storage silo at the São José Farm in the state of Maranhão.



General
and administrative expenses



General
and administrative expenses increased R$4.0 million from R$30.9 million for the year ended June 30, 2017 to R$34.9 million for
the year ended June 30, 2018. This increase was primarily a result of the expenses related to operation in Paraguay, which were
previously accounted for under the equity method and now were consolidated into our results, as a result of the spin-off of Cresca,
the joint-controlled entity in Paraguay, as detailed in note 1.1 to the financial statements included elsewhere in this annual
report, and R$474 thousand increase in taxes payable due to the incorporation of production areas and adjustments in raw land
value, which affected the Tax on Territorial Rural Property (ITR) and other taxes.



Other
operating income (expenses), net



For
the year ended June 30, 2017, other operating expenses, net, amounted to R$6.0 million, mainly due to the management fee reversal
of Cresca, totaling R$3.3 million, and termination costs incurred in the period, relating to the resignation of our Chief Executive
Officer. For the year ended June 30, 2018, other operating income, net amounted to R$35.4 million, which reflects the recognition
of amounts incurred with the conclusion of the spin-off of the Cresca operation in Paraguay, in the amount of R$35.7 million,
which comprise R$5.1 million of effect of fair value measurement and R$30.6 million of currency translation adjustment of joint
venture spin-off.



Equity
pickup



For
the year ended June 30, 2018, we recorded a gain of R$14.7 million related to the results in our investment in Cresca (a loss
of R$4.4 million for the year ended June 30, 2017). See “Item 4. Information on the Company–B. Business Overview–Cresca”.



Financial
income (expenses), net



Financial
income increased R$19.2 million from R$110.1 million for the year ended June 30, 2017 to R$129.3 million for the year ended June
30, 2018 and financial expenses increased R$61.3 million from R$76.6 million for the year ended June 30, 2017 to R$137.9 million
for the year ended June 30, 2018. The change in financial income (expenses), net is mainly attributable to:



| | i. | The
                                         increase in the gain on remeasurement of receivables from the sale of farms and machinery
                                         from R$15.8 million for the year ended June 30, 2017 to R$39.3 million for the year ended
                                         June 30, 2018 and the increase in the loss on remeasurement of receivables from the sale
                                         of farms and machinery from R$7.8 million for the year ended June 30, 2017 to R$26.6
                                         million for the year ended June 30, 2018, which related mainly to the adjustment to the
                                         present value of such receivables. The net gain on remeasurement of receivables from
                                         the sale of farms and machinery of R$12.7 million was due to the variation in the amount
                                         to be received due to the sales of the Araucária and Jatobá Farms, totaling
                                         1.1 million soybean bags. This variation is explained by the soybean price index, considering
                                         the Chicago Stock Exchange (CBOT), port premium (basis), exchange rate and interest rate
                                         (with reference to the CDI).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | The
                                         increase in foreign exchange income from R$11.2 million for the year ended June 30, 2017
                                         to R$12.0 million for the year ended June 30, 2018 and the increase in foreign exchange
                                         expenses from R$10.9 million for the year ended June 30, 2017 to R$11.8 million for the
                                         year ended June 30, 2018, which resulted in a net gain of R$265 thousand for the year
                                         ended June 30, 2018. This increase in foreign exchange income, net refers mainly to the
                                         impact of the appreciation of the dollar on accounts receivable from Cresca, denominated
                                         in dollars.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | The
                                         increase of R$739 thousand of realized and unrealized gains on derivatives transactions
                                         from R$62.2 million for the year ended June 30, 2017 to R$62.9 million for the year ended
                                         June 30, 2018 and the increase of R$23.5 million of realized and unrealized losses on
                                         derivatives transactions from R$44.8 million for the year ended June 30, 2017 to R$68.3
                                         million for the year ended June 30, 2018. For the year ended June 30, 2018, the net result
                                         of derivative transactions was a loss of R$5.3 million, of which R$17.8 million (loss)
                                         is related to currency operations and R$12.5 million gain is related to operations with
                                         commodities. For the year ended June 30, 2017, derivative operations totaled R$17.4 million
                                         loss, of which R$10.7 million are a loss related to currency operations and R$6.7 million
                                         are in operations with commodities. The derivatives result reflects the commodities hedge
                                         operations results and the impact of the exchange variation on cash, which was partially
                                         dollarized in order to maintain purchasing power with regard to inputs, investments and
                                         new acquisitions, which have a positive correlation with the U.S. dollar.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | The
                                         decrease in interest on marketable securities and receivables from R$20.3 million for
                                         the year ended June 30, 2017 to R$14.8 million for the year ended June 30, 2018. This
                                         variation is mainly due to the recognition of the financial revenue obtained from the
                                         Nova Buriti Farm renegotiation, in August 2017, in the amount of R$9.3 million, income
                                         from interest on loans and financing in the amount of R$11.4 million, and loss on Cresca’s
                                         loan interest of R$16.6 million which was forgiven.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | v. | The
                                         decrease in interest on marketable securities expenses from R$2.6 million for the year
                                         ended June 30, 2017 to R$1.4 million for the year ended June 30, 2018 in connection with
                                         the decrease of the total amount of long-term loans and financing for farm development.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





40







Income
and social contribution taxes



We
recognized income and social contribution tax expenses of R$25.9 million for the year ended June 30, 2018 and of R$6.0 million
for the same period in 2017. Current income and social contribution tax expenses increased from R$4.1 million for the year ended
June 30, 2017 to R$4.9 million for the year ended June 30, 2018. Deferred income and social contribution tax expenses increased
from R$1.8 million for the year ended June 30, 2017 to R$21.0 million for the year ended June 30, 2018.



Profit
(loss) for the year



As
a result of the above, profit for the year ended June 30, 2018, increased to R$126.3 million as compared to R$27.3 million for
the year ended June 30, 2017.



Year
Ended June 30, 2017 Compared to Year Ended June 30, 2016



Net
revenue



Net
revenue decreased R$0.2 million from R$147.1 million for the year ended June 30, 2016 to R$146.9 million for the year ended June
30, 2017. This decrease was mainly due to the following:



| | i. | Revenue
                                         from sugarcane sales: revenue from sugarcane sales decreased R$9.9 million from R$83.6
                                         million (reflecting sales of 1,075,183 tons at an average price of R$77.78 per ton) for
                                         the year ended June 30, 2016 to R$73.7 million (reflecting sales of 865,384 tons at an
                                         average price of R$85.31 per ton) for the year ended June 30, 2017. This represents a
                                         decrease of 11.9% over the previous year, mainly resulting from the decrease in sales
                                         volume. The reduction in the number of tons of sugarcane sold was mainly due to the decrease
                                         in the yields from 92.48 tons per hectare to 76.82 tons per hectare. The increase in
                                         the price of sugarcane per ton was due to a 5.0% increase in TRS (total recoverable sugar)
                                         price per kilo, from 0.59 R$/kg for the year ended June 30, 2016 to 0.62 R$/kg for the
                                         year ended June 30, 2017.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | Revenue
                                         from grain sales: revenue from grain sales increased R$9.6 million from R$59.4 million
                                         for the year ended June 30, 2016 (reflecting sales of 81,409 tons at an average price
                                         of R$726.70 per ton) to R$69.0 million for the year ended June 30, 2017 (reflecting sales
                                         of 62,977 tons at an average price of R$1,095.18 per ton). This represents an increase
                                         of 16% over the previous year resulting from an increase in price partially offset by
                                         a decrease in sales volume.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Revenue
                                         from soybean sales: revenue from soybean sales increased R$21.6 million from R$41.7
                                         million (sale of 38,132 tons at R$1,095.37 per ton) for the year ended June 30, 2016
                                         to R$63.3 million (sale of 51,262 tons at R$1,234.54 per ton) for the year ended June
                                         30, 2017. This represents an increase of 51.8% over the previous year resulting from
                                         an increase in sales volume and an increase in price.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Revenue
                                         from corn sales: revenue from corn sales decreased R$11.9 million from R$17.4 million
                                         (sale of 43,278 tons at R$401.77 per ton) for the year ended June 30, 2016 to R$5.5 million
                                         (sale of 11,715 tons at R$467.45 per ton) for the year ended June 30, 2017. This represents
                                         a decrease of 68.5% over the previous year, resulting from a decrease in sales volume
                                         partially offset by an increase in price.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|          |  |  | Harvest (hectares) |        |  | Productivity (tons) |  |        | Revenue (R$ thousands) | 
|--------- |  |  | ------------------ | ------ |  | ------------------- |  | ------ | ---------------------- | 
|          |  |  | 2017               |        |  | 2016                |  |        | 2017                   | 
|Grain     |  |  |                    | 30,139 |  |                     |  | 29,087 |                        | 
|Sugarcane |  |  |                    | 13,217 |  |                     |  | 12,117 |                        | 



Gain
on sale of farms



For
the year ended June 30, 2017, we sold 2,259 hectares of the Araucária and Jatobá farms in the State of Goiás
and Bahia, respectively for R$32.0 million with a cost of R$9.1 million. In addition, a total of R$3.8 million was recorded related
to the sale of Fazenda Cremaq in 2015, relating to an area of 6,020 hectares that was in the process of a geo-referencing dismemberment
which caused registration of the real estate to be pending. Once the registration was effected, the amount was released. For the
year ended June 30, 2016, we did not sell any farms.



Changes
in fair value of biological assets and agricultural products



Changes
in fair value of biological assets and agricultural products varied from a loss of R$12.6 million for the year ended June 30,
2016 to a profit of R$12.3 million for the year ended June 30, 2017. This variation resulted mainly from the increase in the fair
value of biological assets and agricultural products of grains from a loss of R$32.2 million for the year ended June 30, 2016
to a profit of R$4.3 million for the year ended June 30, 2017. Such variation was mainly due to increase in the soybean and corn
yields in relation to the previous year which was impacted from a severe drought that hit the farms in Bahia, and had a direct
impact in the soybean yield from the farms in Bahia as well as the first corn crop. In addition, the fair value of biological
assets and agricultural products of sugarcane changed from a profit of R$19.5 million for the year ended June 30, 2016 to a profit
of R$11.5 million for the year ended June 30, 2017. Such variation was a result mainly from a decrease in sugarcane yield (from
92.48 tons per hectare to 76.82 tons per hectare).



In
fiscal year ended June 30, 2017, we applied the amendments to IAS 16, Property, Plant and Equipment (“IAS 16”) and
IAS 41, Agriculture (“IAS 41”), which changed the accounting requirements for biological assets that fall within the
definition of “bearer plants.” The effects of the application of such amendments have been retroactively applied as
of July 1, 2014.



Adjustments
to net realizable value of agricultural products after harvest



We
recognized a reversal of net realizable value of agricultural products after harvest of R$659 thousand for the year ended June
30, 2016. For the year ended June 30, 2017, we recognized an impairment of net realizable value of agricultural products after
harvest of R$1.7 million. Such variations resulted from the reduction in the corn and soybean prices from the harvest time to
the end of the respective fiscal year.





41







Cost
of sales



Cost
of sales increased R$1.6 million from R$134.7 million for the year ended June 30, 2016 to R$136.4 million for the year ended June
30, 2017. Changes in costs year-over-year are directly linked to the market prices of commodities at the time of harvest as well
as the harvested volumes (tons), as explained below:



| | i. | Cost
                                         of soybean sold: the cost of soybean sold increased by R$16.9 million. Our average
                                         cost per ton of soybean sold increased 9.3% from R$948.46 per ton (corresponding to 38,132
                                         tons at a total cost of R$36.2 million) for the year ended June 30, 2016 to R$1,036.61
                                         per ton (corresponding to 51,262 tons at a total cost of R$53.1 million) for the year
                                         ended June 30, 2017.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | Cost
                                         of corn sold: the cost of corn sold decreased by R$10.8 million. Our average cost
                                         per ton of corn sold increased 27.8% from R$381.98 per ton (corresponding to 43,278 tons
                                         at a total cost of R$16.5 million) for the year ended June 30, 2016 to R$488.32 per ton
                                         (corresponding to 11,715 tons at a total cost of R$5.7 million) for the year ended June
                                         30, 2017.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | Cost
                                         of sugarcane sold: the cost of sugarcane decreased by R$1.1 million. Our average
                                         cost per ton of sugarcane sold increased 22.4% from R$70.32 per ton (corresponding to
                                         1,075,183 tons at a total cost of R$75.6 million) for the year ended June 30, 2016 to
                                         R$86.09 per ton (corresponding to 865,384 tons at a total cost of R$74.5 million) for
                                         the year ended June 30, 2016.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | Cost
                                         of leasing: For the year ended June 30, 2016 there was a decrease in the cost of
                                         leasing of R$3.7 million in connection with Partnership I. As Partnership I had terminated
                                         in the year ended June 30.2016, for the year ended June 30, 2017, we did not have any
                                         comparable costs of leasing.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gross
profit



For
the reasons mentioned above, our gross profit for the year ended June 30, 2017 was R$47.9 million, representing an increase of
R$47.4 million as compared to R$441 thousand for the year ended June 30, 2016.



Selling
expenses



Selling
expenses increased R$3.9 million from R$2.7 million for the year ended June 30, 2016 to R$6.7 million for the year ended June
30, 2017, primarily as a result of the increase in freight and storage and processing expenses which reflects the amount of grain
sold in the period from R$2.6 million for the year ended June 30, 2016 to R$5.3 million for the year ended June 30, 2017 and the
reversal of provisions for onerous contracts totaling R$579 thousand in fiscal year 2016.



General
and administrative expenses



General
and administrative expenses increased R$1.9 million from R$28.9 million for the year ended June 30, 2016 to R$30.9 million for
the year ended June 30, 2017. This increase was primarily a result of the of expenses regarding the operation in Paraguay, which
is under spin-off processing and will be consolidated by BrasilAgro and 26.8% increase in professional fees paid to an independent
appraisal report for valuation of land.



Other
operating income (expenses), net



For
the year ended June 30, 2016, other operating income, net amounted to R$2.8 million, which included a R$2.3 million gain for the
discount obtained in the balance payable for the Alto Taquari Farm and R$2.2 million for the provision for legal proceedings partially
offset by R$1.2 million of reversal of taxes. For the year ended June 30, 2017, other operating expenses, net, amounted to R$
6.0 million, mainly due to the management fee reversal of Cresca, totaling R$3.3 million, and termination costs incurred in the
period, referring to the resignation of the Chief Executive Officer.



Equity
pickup



For
the year ended June 30, 2017, we recorded a loss of R$4.4 million related to the results in our investment in Cresca (a loss of
R$511 thousand for the year ended June 30, 2016).



Financial
income (expenses), net



Financial
income decreased R$82.6 million from R$192.6 million for the year ended June 30, 2016 to R$110.1 million for the year ended June
30, 2017 and financial expenses decreased R$77.6 million from R$154.3 million for the year ended June 30, 2016 to R$76.6 million
for the year ended June 30, 2017. The change in financial income (expenses), net is attributable mainly to:



| | vi. | The
                                         decrease in the gain on remeasurement of receivables from the sale of farms and machinery
                                         from R$22.5 million for the year ended June 30, 2016 to R$15.8 million for the year ended
                                         June 30, 2017 and the decrease in the loss on remeasurement of receivables from the sale
                                         of farms and machinery from R$12.6 million for the year ended June 30, 2016 to R$7.8
                                         million for the year ended June 30, 2017, which related mainly to the adjustment to the
                                         present value of such receivables. The net gain on remeasurement of receivables from
                                         the sale of farms and machinery of R$8.0 million was mainly due to an increase in the
                                         soybean price as well as the impact of the appreciation of the dollar on the soybean
                                         price used to calculate the fair value of receivables from sales of farms.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | vii. | The
                                         increase in foreign exchange income from R$8.9 million for the year ended June 30, 2016
                                         to R$11.2 million for the year ended June 30, 2017 and the increase in foreign exchange
                                         expenses from R$8.7 million for the year ended June 30, 2016 to R$10.9 million for the
                                         year ended June 30, 2017, which resulted in a net gain of R$249 thousand for the year
                                         ended June 30, 2017. This increase in foreign exchange income, net refers mainly to the
                                         impact of the appreciation of the dollar on accounts receivable from Cresca.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





42







| | viii. | The
                                         decrease of R$53.9 million of realized and unrealized derivatives transactions income
                                         from R$116.2 million for the year ended June 30, 2016 to R$62.2 million for the year
                                         ended June 30, 2017 and the decrease of R$65.4 million of realized and unrealized derivatives
                                         transactions (expenses) from R$110.2 million for the year ended June 30, 2016 to R$44.8
                                         million for the year ended June 30, 2017, which resulted in a net gain of R$5.9 million
                                         for the year ended June 30, 2016 and R$17.4 million for the year ended June 30, 2017.
                                         This variation reflects the commodities hedge operations result from an income of R$5.7
                                         million for the year ended June 30, 2016 to R$9.7 million for the year ended June 30,
                                         2017 and the impact of the exchange variation on cash from an income of R$11.6 million
                                         for the year ended June 30, 2016 to R$7.7 million for the year ended June 30, 2017. We
                                         partially converted cash into dollars in order to maintain purchasing power with regard
                                         to inputs, investments and new acquisitions, which have positive correlations with the
                                         U.S. currency.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ix. | The
                                         decrease in interest on marketable securities and receivables from R$45.0 million for
                                         the year ended June 30, 2016 to R$20.8 million for the year ended June 30, 2017 in connection
                                         with the decrease of the cash position and the impact of the U.S. dollar exchange appreciation
                                         on the Cresca’s receivables.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | x. | The
                                         decrease in interest on marketable securities charges from R$9.9 million for the year
                                         ended June 30, 2016 to R$2.6 million for the year ended June 30, 2017 in connection with
                                         the decrease of the total amount of the long-term loans and financing to develop the
                                         farms.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Income
and social contribution taxes



We
recognized income and social contribution tax expenses of R$6.0 million for the year ended June 30, 2017 and of R$1.5 million
for the same period in 2016. Current income and social contribution tax expenses decreased from R$16.0 million for the year ended
June 30, 2016 to R$4.1 million for the year ended June 30, 2017, which was offset by a deferred income and social contribution
tax gain of R$14.6 million for the year ended June 30, 2016, mainly related to the recognition of deferred loss tax carryforwards
and a deferred income and social contribution tax loss of R$1.8 million for the year ended June 30, 2017.



Profit
(loss) for the year



As
a result of the above, profit for the year ended June 30, 2017, amounted to R$27.3 million as compared to R$8.0 million for the
same period in 2016.



| | B. | Liquidity
and Capital Resources
| | -- | -------------------------------



As
of June 30, 2018, we hold R$115.5 million in cash and cash equivalents and marketable securities. We usually hold cash and cash
equivalents in Certificate of Deposits and Repurchase Agreements issued by banks rated at least AA by Moody’s and Brazilian
and American government bonds. Of the total amount of cash and cash equivalents, approximately R$22.7 million was held in jurisdictions
outside Brazil and as a result there may be tax consequences if such amounts were moved out of these jurisdictions or repatriated
to Brazil. We regularly review the amount of cash and cash equivalents held outside of Brazil to determine the amounts necessary
to fund the current operations of our foreign operations and their growth initiatives and amounts needed to service our Brazilian
indebtedness and related obligations.



Throughout the year, our working capital needs vary significantly depending on the harvest
period of grains, sugarcane and other crops in Brazil.



See
“Item 4. Information on the Company–B. Business Overview–Seasonality.”



We
believe that our current capital resources, together with our ability to obtain loans and credit facilities and, when appropriate,
to raise equity in the capital markets, are sufficient to meet our present cash flow needs.



Sources
and Uses of Funds



We
finance our investments both by using our own resources as well as through loans and credit facilities with development banks
and governmental development agencies, under which interest rates are lower than market rates, due to the fact that such credit
facilities have long-term characteristics. Our principal sources of financing are discussed below under the heading “Indebtedness
and cash and cash equivalents” and our main uses of funds include acquisition of land, cultivation of sugarcane, improvements
and acquisition of machinery and vehicles.



The
investments made in the fiscal year ended June 30, 2018 totaled R$20.1 million, all of which were used for the development of
land for cultivation of grains, sugarcane and pasture.



Cash
Flows



Our
cash flow generation from operating activities may vary from period to period depending on fluctuations in our sales and service
revenue, costs of goods sold and operating income (expenses) and may also vary within such periods as a result of seasonality.
Operating activities primarily refer to revenue generated from the sale of grains and sugarcane.



Investing
activities primarily refer to the acquisition of agricultural properties, developing of such properties for cultivation, purchasing
machines, and remodeling, construction and improvements to agricultural properties and sale of farms.



Financing
activities primarily refer to loans and credit facilities, principally from development banks, for the development of new projects
and the purchase of machines and equipment.



43







The
table below presents our cash flows for the periods indicated.



|                                                    |  | Year ended June 30, |        
|--------------------------------------------------- |  | ------------------- | -------
|                                                    |  | 2018                |        
|                                                    |  | (R$ thousands)      |        
|CONSOLIDATED CASH FLOW                              |  |                     |        
|Net cash flows (used in) from operating activities  |  |                     | (2,264 
|Net cash flows (used in) from investment activities |  |                     | (65,700
|Net cash flows from (used in) financing activities  |  |                     | 125,414
|Net change in cash and cash equivalents             |  |                     | 57,450 



Years
ended June 30, 2018 and 2017



Operating
activities: Net cash used in operating activities was R$2.3 million for the year ended June 30, 2018 compared to a net cash
generated from operating activities of R$65.0 million for the year ended June 30, 2017. This change was primarily due to: (i)
decrease in cash flows from transactions with derivative financial instruments from a cash generated of R$19.0 million for the
year ended June 30, 2017 to a cash used of R$17.0 million for the year ended June 30, 2017; (ii) decrease in cash flows from transactions
with related parties from a cash generated of R$16.7 million for the year ended June 30, 2017 to a cash used of R$2.3 million
for the year ended June 30, 2018; (iii) decrease of R$13.8 million in cash generated from suppliers; and (iv) increase of R$52.1
million in cash used in inventories, which was partially offset by an increase of R$54.7 million in cash generated from biological
assets and an increase of R$10.2 million in the cash generated from advances from customers.



Investing
activities: Net cash used in investing activities was R$65.7 million for the year ended June 30, 2018 compared to R$13.5 million
for the year ended June 30, 2017. This increase in cash used was mainly due to a redemption of marketable securities of R$125.0
million for the year ended June 30, 2017 compared to investment in marketable securities of R$4.0 million for the year ended June
30, 2018, which was partially offset by a decrease in cash used in investments made in property, plant and equipment and investment
properties in the amount of R$77.7 million.



Financing
activities: Net cash generated from financing activities was R$125.4 million for the year ended June 30, 2018 compared to
net cash used in financing activities of R$61.9 million in the same period in 2017. This change was primarily due to: (i) issuance
of Agribusiness Receivables Certificates (ARC) in the aggregate amount of R$142.2 million in the year ended June 30, 2018; (ii)
increase in cash proceeds from new loans and financing in the amount of R$88.6 million; and (iii) reduction in the purchase of
treasury shares, reducing cash used in the amount of R$14.1 million, which was partially offset by an increase of payment of loans
and financing in the amount of R$57.1 million.



Years
ended June 30, 2017 and 2016



Operating
activities: Net cash generated from operating activities was R$65.0 million for the year ended June 30, 2017 compared to a
net cash used of R$6.4 million for the year ended June 30, 2016. This change was primarily due to: (i) increase in the derivative
financial instruments from a cash used of R$9.7 million for the year ended June 30, 2016 to a cash generated of R$19.0 million
for the year ended June 30, 2017; (ii) increase in cash generated on suppliers from R$6.5 million for the year ended June 30,
2016 to R$25.0 million for the year ended June 30, 2017; and (iii) decrease in unrealized foreign exchange loss, monetary variation
and financial charges, net from a cash used of R$24.0 million for the year ended June 30, 2016 to R$8.5 million for the year ended
June 30, 2016.



Investing
activities: Net cash used in investing activities was R$13.5 million for the year ended June 30, 2017 compared to a net cash
generated of R$149.8 million for the year ended June 30, 2016. This change was mainly due to the increase of R$100.0 million in
the cash used as a result of the acquisition of São José Farm in 2017.



Financing
activities: Net cash used in financing activities was R$61.9 million for the year ended June 30, 2017 compared to R$164.8
million in the same period in 2016. This decrease in net cash used was primarily due to: (i) a decrease of R$48.7 million of dividends
paid to R$32.0 million in fiscal year 2017 from R$80.7 million in fiscal year 2016, (ii) a decrease in payments of installments
of financed acquisition of farm from R$27.4 million in fiscal year 2016 to no such payments in fiscal year 2017; and (iii) a decrease
of R$24.9 million in treasury stock acquired to R$14.7 million in the year ended June 30, 2017 (R$39.7 million in fiscal year
2016).



44







Indebtedness
and Cash and Cash Equivalents



Our
total consolidated indebtedness (loans, financing, debentures and finance leases) was R$276.0 million as of June 30, 2018, as
compared to R$112.2 million as of June 30, 2017. Our short-term indebtedness as of June 30, 2018 amounted to R$70.1 million, as
compared to R$56.6 million as of June 30, 2017. Our long- term indebtedness as of June 30, 2018 was R$205.9 million, as compared
to R$55.6 million on June 30, 2017. Of the total indebtedness outstanding as of June 30, 2018, 74.6% consisted of medium and long-term
debt, as compared to 49.5% as of June 30, 2017.



Our
indebtedness is primarily composed of loans and credit facilities with development banks and government agencies, by means of
direct or indirect disbursements, and acquisitions payable with regard to our agricultural properties. Interest rates are generally
lower than prevailing rates in Brazil, due to the fact that these credit facilities have long-term characteristics and other terms
specific to the development agencies.



In
addition, in May 25, 2018, 142,200 first issue debentures were subscribed and paid-in, not convertible into shares, to be converted
into collateral, in two series, for private placement totaling R$142.2 million, of which R$85.2 million in the first series and
R$57.0 million in the second series. The Debentures were tied to a securitization transaction, used as guarantee for the issue
of 142,200 Certificates of Agribusiness Receivables. The first series will mature on August 1, 2022, subject to interest corresponding
to 106.5% of the DI Rate, and the second series will mature on July 31, 2023, subject to interest corresponding to 110.0% of the
DI Rate.



The
debentures contain certain financial covenants related to the maintenance of certain financial ratios, based on the ratio of net
debt to fair value of investiment properties. Failure by the Company to maintain these ratios for the period of time during which
the debentures remain outstanding may lead to the acceleration of the debt. On June 30, 2018 and as of the date of this annual
report, the Company is in compliance with these covenants.



All
loans and financing agreements listed below are in Reais and have specific terms and conditions defined in the respective
contracts with governmental economic and development agencies (including the Brazilian Development Bank – BNDES and the
Northeastern Development Bank - BNB) that directly or indirectly grant those loans.



The
table below summarizes our material outstanding loans and financing agreements as of June 30, 2018.



|Type
of credit transaction           |  | Creditor/Transfer
agent                             |  | Amount
disbursed(R$ thousands) |         |  | Outstanding
Balance (R$ thousands) |  |         | Interest
rate |  | Finalmaturity                       |  | Current(R$ thousands) |  |  | Noncurrent(R$ thousands) | 
|------------------------------------ |  | --------------------------------------------------- |  | ------------------------------ | ------- |  | ---------------------------------- |  | ------- | ------------- |  | ----------------------------------- |  | --------------------- |  |  | ------------------------ | 
|Financing for Agricultural Costs     |  | ABC / Banco Itaú Unibanco S.A.                      |  |                                | 10,703  |  |                                    |  | 43,333  |               |  | 7.22% to 9%/year                    |  | Sep-18                |  |  | 43,333                   | 
|Financing Bahia Project              |  | Banco HSBC   Banco do Nordeste do Brasil S.A. – BNB |  |                                | 46,098  |  |                                    |  | 30,277  |               |  | Fixed rate 4% to 9%                 |  | Aug-23                |  |  | 3,131                    | 
|Working capital                      |  | Banco Rabobank                                      |  |                                | 15,782  |  |                                    |  | —       |               |  | 1.40% to 2.30% + 100% of CDI        |  | May-18                |  |  | —                        | 
|Working capital (USD)                |  | Banco Itaú Unibanco S.A.                            |  |                                | 5,031   |  |                                    |  | —       |               |  | 3.49%/year                          |  | Aug-17                |  |  | —                        | 
|Financing of Machinery and Equipment |  | Banco Itaú Unibanco S.A./Banco Rabobank             |  |                                | 1,209   |  |                                    |  | 6,041   |               |  | TJLP + 3.73%   Fixed rate 9% to 11% |  | Jun-24                |  |  | 630                      | 
|Financing of Sugarcane               |  | Itaú, Rabobank, Banco do Brasil and Santander       |  |                                | 9,273   |  |                                    |  | 34,512  |               |  | TJLP + 2.70   Fixed rate 9% to 10%  |  | Dec-23                |  |  | 21,318                   | 
|Sugarcane Financing Leasing          |  | Partnership III                                     |  |                                | 3,284   |  |                                    |  | 1,676   |               |  | 6.62%/year                          |  | Nov-18                |  |  | 1,676                    | 
|Sugarcane Financing Leasing          |  | Partnership IV                                      |  |                                | 20,795  |  |                                    |  | 18,539  |               |  | R$/Kg 0,6462                        |  | Jan-32                |  |  | —                        | 
|Debentures                           |  | Insurance Company                                   |  |                                |         |  |                                    |  | 141,642 |               |  | 106.5% and 110% of CDI              |  | Jul-23                |  |  |                          | 
|Total                                |  |                                                     |  |                                | 112,175 |  |                                    |  | 276,020 |               |  |                                     |  |                       |  |  | 70,088                   | 



Capital
Expenditures



We
are focused on the acquisition, development and exploration of agricultural properties and the acquisition and development of
properties that we believe have significant potential for cash flow generation and value appreciation. Our total capital expenditures
related to these assets for the year ended June 30, 2018 were R$23.7 million, of which R$20.1 million refer to construction in
progress, mostly for the clearance of areas, R$2.2 million refer to the expenses related to the Nova Buriti Farm renegotiation
and R$1.4 thousand refer to the opening and preparation of areas for cultivation.



Equity



Our
total equity excluding non-controlling interest amounted to R$755.9 million as of June 30, 2018 and R$667.5 million as of June
30, 2017.



| | C. | Research
                                         and Development, Patents and Licenses, etc.
| | -- | ---------------------------------------------------------------------------------------------



We
do not currently have research and development policies and have not incurred research and development expenditures in prior years.



| | D. | Trend
                                         Information
| | -- | ----------------------------------------------------------



We
will continue to operate in a highly competitive and regulated environment that will pose continued risks and threats to our existing
businesses, placing the profitability of our assets under pressure. We expect our business to continue to be subject to the risks
and uncertainties discussed in “Item 3—Key Information—Risk Factors.”



According
to a report released in September 2018 by the United States Department of Agriculture (“USDA”), the soybean global
production is forecasted at a record 369.3 million tons for 2018/19 crop year, and Brazil’s production estimate is raised
to a record of 120.5 million tons on a larger area as lower prices are offset by the weaker exchange rate of the Real. Also, the
Real depreciation continues to provide farmers with an incentive for continued expansion of planted area in South America
despite higher financing costs.



In
addition to the information set forth in this section, additional information about the trends affecting our business can be found
in “Item 5. Operating and Financial Review and Prospects—Operating Results—Business Drivers and Measures.”



We
are not aware of any other trends, uncertainties, demands, commitments or events that are reasonably likely to have a material
effect on our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that
would cause reported financial information to not necessarily be indicative of future operating results or financial condition.



| | E. | Off-Balance
                                         Sheet Arrangements
| | -- | -----------------------------------------------------------------------



We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.



| | F. | Tabular
                                         Disclosure of Contractual Obligations
| | -- | --------------------------------------------------------------------------------------



The
following table summarizes our significant contractual obligations and commitments as of June 30, 2018:



|                                                       |  | Maturities
                                         per period |       
|------------------------------------------------------ |  | -------------------------------------------------------------- | ------
|                                                       |  | Less
                                         than One Year    |       
|                                                       |  |                                                                |       
|Trade
    accounts payables                            |  |                                                                | 48,518
|Derivative financial
    instruments                   |  |                                                                | 10,489
|Loans, financing,
    debentures and finance leases(1) |  |                                                                | 70,088
|Payables for purchase
    of Nova Buriti               |  |                                                                | —     
|Transactions with
    related parties(2)               |  |                                                                | 1,831 








| | (1) | Interest
                                         on variable interest rate loans and financing has been computed considering the interest
                                         rate as of June 30, 2018. See “Indebtedness and Cash and Cash Equivalents.”
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | See
                                         “Item 7.B. Related Party Transactions.”
| | --- | ------------------------------------------------------------------------------------



On
May 8, 2015, we executed three agreements with Brenco:



The
first agreement consists of a rural sub partnership to operate nine farms located in the municipalities of Alto Araguaia and Alto
Taquari, in the state of Mato Grosso. The sub partnership started at the date of its signature and is estimated to end on March
31, 2026. The areas are to be used for the plantation and cultivation of sugarcane, which cannot exceed the duration of the contract.
This contractual partnership meets the definition of an operating leasing. The payment must always be in kind (tons of sugarcane)
and delivered at the mill owned by Brenco, which is located in the vicinity of the farms, during the harvest period of the product.
The quantity to be paid for the duration of the contract shall be established in tons per hectare and varies according to the
area being explored. According to this contract, the quantity to be paid in the long term corresponds to 529,975 tons of sugarcane,
of which 174,929 tons will be paid within one to five years and 355,046 tons will be paid after more than five years up to the
expiration of the agreement.





45







The
second agreement relates to the regulation of rights and obligations between agricultural partners from whom BrasilAgro acquired
the crops of sugarcane planted by Brenco in the properties subject to the sub partnership agreement described above. This contract
meets the definition of a financial leasing. The payment must always be in kind (tons of sugarcane) and delivered at the mill
owned by Brenco during the harvest period of the product. According to this contract, the quantity to be paid in the long term
corresponds to 53,845 tons of sugarcane, of which 18,604 tons will be paid within one year and 35,241 tons will be paid within
one to five years.



The
third agreement regulates the exclusive supply to Brenco of the total sugarcane production in the properties included in the sub
partnership agreement for two crop cycles, one cycle shall be effective until the depletion of the already existing sugarcane
crops and the other cycle consists of the sugarcane being planted by BrasilAgro.



On
February 7, 2017, we entered into two agreements for an agricultural partnership in relation to a property in São Raimundo
das Mangabeiras, state of Maranhão, or Partnership IV.



The
first agreement under Partnership IV establishes an agricultural partnership with Agro Pecuária e Industrial Serra Grande
Ltda. (“Serra Grande”), which consists of a sugarcane exploration agreement of an area of around 15,000 hectares.
The agricultural partnership will last for 15 years from the date of the agreement and may be extended for the same period. The
amount to be paid to Serra Grande corresponds to 10% of the entire production obtained in the area referred to in the agreement
and the initial volume to be produced in the area during the first year of the agreement was established at 850,000 tons. After
this period, spanning between one and five years, the minimum volume to be produced in the partnership areas is 4,500,000 tons
of sugarcane, and from the sixth year onward until the expiration of the agreement, the minimum production volume is 1,250,000
tons of sugarcane per crop year.



The
second agreement under Partnership IV governs the rights and obligations of the agricultural partners, through which BrasilAgro
acquired sugarcane crops planted by the agricultural partner in the areas referred to in the partnership agreement described above.
This agreement meets the definition of a finance lease. As consideration, BrasilAgro undertakes to return, at the end of the agreement,
the area referred to in the partnership agreement together with sugarcane stubble crops with the capacity to produce 850,000 tons
of sugarcane in the crop year subsequent to the termination of the agricultural partnership agreement.



| | G. | Safe
                                         harbor
| | -- | ----------------------------------------------------



See
“Forward-Looking Statements.”



ITEM
6—DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



| | A. | Directors
                                         and Senior Management Board of Directors
| | -- | -------------------------------------------------------------------------------------------



Our
board of directors is responsible for establishing our overall business plan, guidelines and policies, including our long-term
strategy, and for overseeing our performance. Our board of directors is also responsible for the supervision of our executive
officers.



Pursuant
to our bylaws, our board of directors consists of a minimum of five and a maximum of nine members. Election of our directors is
made at annual shareholders’ meetings. At the date of this annual report, five of our directors, namely Eduardo Elsztain,
Alejandro G. Elsztain, Saul Zang, Carlos María Blousson and Alejandro Casaretto were nominated by our controlling shareholder
Cresud. The members of our board are elected at the shareholders’ meeting for a term of approximately two years, reelection
being permitted. A director must remain in office until replaced by a successor unless resolved otherwise at the shareholders’
meeting or by the board of directors.



Under
Novo Mercadoregulations and our bylaws, a minimum of 20% of the members of our board of directors must be independent
(as such term is defined under Novo Mercadoregulations). However, three directors must be independent if nine members
are elected to our board. Prior to taking office, our board members are required to sign an agreement to comply with the Novo
Mercadoregulation.



Pursuant
to section 19 of our bylaws, our board of directors holds mandatory meetings six times a year, and may hold extraordinary meetings,
as necessary. Meetings of our board of directors are convened only if a majority of the directors are present and all board decisions
are taken by a 2/3 or 3/4 majority, or by simple majority, depending on the nature of the specific matters brought to discussion.



Brazilian
corporate law and CVM Regulation No. 282 of June 26, 1998 allow the adoption of a cumulative vote process by the request of shareholders
representing a minimum of 5% of our capital stock. Brazilian corporate law allows minority shareholders that, individually or
as a group, hold at least 15% of our common shares to appoint one director, by means of a separate vote. Brazilian corporate law
does not allow for the election of a member to our board of directors, unless waived by our shareholders, if that person is an
employee or senior manager of one of our competitors or has an interest conflicting with ours.



Our
board of directors is currently comprised of nine members, all of whom were elected at the general shareholders’ meeting
held on October 2, 2017, and whose terms will expire at our annual shareholders’ meeting for the approval of our financial
statements for the fiscal year to end on June 30, 2019. The table below sets forth the name, title and date of election of each
current member of our board of directors:



|Directors*                        |  | Title                      |  | Date
    of election |  | Age
|--------------------------------- |  | -------------------------- |  | -------------------- |  | ---
|Eduardo
    S. Elsztain           |  | Chairman                   |  | October
    2, 2017  |  | 58 
|Alejandro
    G. Elsztain         |  | Director                   |  | October
    2, 2017  |  | 52 
|Saul
    Zang                     |  | Director                   |  | October
    2, 2017  |  | 73 
|Isaac
    Selim Sutton            |  | Independent
    Director** |  | October
    2, 2017  |  | 58 
|Carlos
    María Blousson         |  | Director                   |  | October
    2, 2017  |  | 55 
|Alejandro
    Casaretto           |  | Director                   |  | October
    2, 2017  |  | 67 
|João
    de Almeida Sampaio Filho |  | Independent
    Director** |  | October
    2, 2017  |  | 53 
|Robert
    Gibbins                |  | Independent
    Director** |  | October
    2, 2017  |  | 49 
|Ricardo
    de Santos Freitas     |  | Independent
    Director** |  | October
    2, 2017  |  | 52 



| | * | Ms.
Carolina Zang and Mr. Gastón Armando Lernoud were elected to the positions of first and second alternate members of our
Board of Directors.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

| | ** | Independent
director as defined under the Novo Mercado regulations.
| | -- | -------------------------------------------------------------------





46







Below
is a brief biographical description of each member of our board of directors:



Eduardo
S. Elsztain. Mr. Elsztain has been engaged in the real estate business for more than twenty years. He founded Consultores
Asset Management (formerly called Dolphin Fund Management). Currently, he is Chairman of the Board of Cresud, IRSA- Inversiones
y Representaciones Sociedad Anónima and Irsa Popriedades Comerciales S.A., among other positions. IRSA Inversiones y Representaciones
Sociedad Anónima and Irsa Popriedades Comerciales S.A. are considered two of the largest real estate companies in Argentina,
highlighted by their commercial, residential, shopping malls and hotels ventures. He is also the Chairman of Banco Hipotecário
S.A. and IDB Development Corporation Ltd. He studied Economic Sciences at Universidad de Buenos Aires. He is Alejandro G. Elsztain’s
brother.



Alejandro
G. Elsztain. Mr. Elsztain is the Chief Executive Officer of Cresud and the Chairman of the Board of Fibesa S.A; vice-president
of the Board of Directors of Nuevas Fronteras S.A. and Inversora Bolivar S.A.; second vice president of IRSA - Inversiones y Representaciones
Sociedad Anónima; and executive vice-president of Irsa Propiedades Comerciales S.A., among others. Mr. Alejandro Elsztain
holds a degree in Agricultural and Livestock Engineering from the University of Buenos Aires. He is Eduardo S. Elsztain’s
brother.



Saul
Zang. Mr. Zang is the founder of the law firm Zang, Bergel &Viñes. He is a member of the International
Bar Association and the Interamerican Federation of Lawyers. Currently he is the first vice-chairman of IRSA- Inversiones y Representaciones
Sociedad Anónima and Irsa Popriedades Comerciales S.A. Chairman of Puerto Retiro Board of Directors; vice president of
Fibesa S.A. Board of Directors; director of Banco Hipotecario S.A., Nuevas Fronteras S.A., and IDB Development Corporation Ltd.,
among others. Mr. Zang holds a degree in law from Universidad de Buenos Aires.



Isaac
Selim Sutton. Mr. Sutton holds a degree in economics from the Universidade de São Paulo (USP). He was an executive
officer at the Safra Group’s holding company from 1994 to 2009. He is currently a member of the Fiscal Council of Bardella
S.A. Indústrias Mecânicas. He has also served on the Boards of Bardella S/A, DPVAT S/A, Telenorte Celular, TIM Participações
S/A, Veracel Celulose S/A, BR Properties S/A, Gevisa S/A and Celma S/A, and on the Fiscal Councils of TIM Sul, Têxtil Renaux
and TIM Nordeste.



Carlos
María Blousson. Mr. Blousson holds a degree in agronomy from the University of Buenos Aires. He has held several
positions at Cresud SACIFy A. since 1996. At the beginning of his career at that company, he held a position in the commercial
department until his appointment as Commercial Director in 1999. Afterwards, he was responsible for the expansion of the company
for the region until he was finally promoted to the post of International Chief Executive Officer in 2008. He was subsequently
appointed Managing Director for operations in Argentina and Brazil, a position he has held since 2012. Prior to joining Cresud,
Mr. Blousson worked at Vanexa Bursátil as a farm manager and technical consultant at Leucon S.A.



Alejandro
Gustavo Casaretto. Mr. Casaretto joined Cresud S.A.C.I. A. A. in 1979, having held several positions related to the
management of the company in matters related to agribusiness since his entry into the Company. Mr. Casaretto was appointed as
director in several companies, such as Sociedad Anónima Carnes Pampeanas S.A. and Agro Uranga S.A.



João
de Almeida Sampaio Filho. Mr. Sampaio Filho holds a degree in Economics from the Fundação Armando Álvares
Penteado (FAAP) and is an agricultural producer in the states of Paraná, São Paulo and Mato Grosso. He was President
of the National Natural Rubber Commission of the Brazilian Confederation of Agriculture and Livestock (CNA) and President of the
National Natural Rubber Sector Chamber. He was a member of the National Council of Agricultural Policy and the National Agricultural
Academy. Mr. Sampaio was President of the Brazilian Farmers’ Association (SRB) between 2002 and 2007, President of FARM
– Mercosul’s Federation of Rural Associations and São Paulo State Secretary for Agriculture and Supply between
2007 and 2011. He is currently a Member of Advisory and Managing Boards of companies in Brazil and the USA, Minerva S.A.’s
Chief Officer of Institutional Relations and Chairman of FIESP Agribusiness Higher Council.



Robert
Gibbins. Mr. Gibbins holds a B.S. in Economics from the Wharton School at the University of Pennsylvania. Robert has
been advising and managing global macro and emerging market portfolios and investments for over 20 years and as the head portfolio
manager for Autonomy’s global macro, private equity and real estate strategies is responsible for all of Autonomy’s
investment activities. Previously, he was the head of Emerging Markets and Global Macro Proprietary Trading at Lehman Brothers
from 1996 to 2003; from 1994 to 1996 he was responsible for FX and Interest rate trading within Northern Europe at Lehman Brothers.
He began his career at JP Morgan in 1992.



Ricardo
de Santos Freitas. Mr. Freitas holds a degree in Law and Ph.D. in Commercial Law from the University of São
Paulo, is a founding partner at Freitas & Leite Law Firm, and specialized in financing and capital markets, as well as tax
matters. Mr. Freitas worked as a lawyer at Hedging-Griffo Corretora de Valores S.A. and as a statutory executive responsible for
the management of customer’s assets at Banco Intercap S.A. Currently he is the CEO and Chairman of Semp Toshiba Amazonas,
where he also acted as administrative and financial vice president.



Board
Committees



Pursuant
to our bylaws, our board of directors shall elect among its members three directors to compose the Compensation Committee and
a minimum of three and a maximum of four directors to compose the Executive Committee. In addition to these two statutory committees,
our board of directors may establish other technical or advisory committees for a specific purpose and with specific duties, which
members may or may not include our directors or executive officers. Our board of directors shall establish the rules applicable
to these committees, including rules on their composition, term of office, compensation and operation. Such committees are advisory
and non-deliberative in nature. The following advisory committees are currently established and active:





Compensation
Committee



The
Compensation Committee was established on March 1, 2012, and is composed of the following members of our board of directors, all
elected on November 6, 2017 for a term of office of two years, which will end at the annual general meeting for approval of our
financial statements for the fiscal year to end on June 30, 2019: (i) Alejandro G. Elsztain, (ii) Saul Zang, (iii) Isaac Selim
Sutton and (iv) Robert Charles Gibbins. In accordance with our bylaws, the Compensation Committee performs consultative assistance
to the Board of Directors, including with respect to the determination of the compensation and benefits to be received by our
directors and executive officers. Its activities include (i) submitting proposals to the Board of Directors with respect to director
and executive officer compensation, (ii) advising the Board of Directors with respect to the granting of stock options or subscription
warrants to our officers and employees, and (iii) advising the Board of Directors with respect to profit sharing plans involving
our executive officers and employees.



47







Executive
Committee



The
Executive Committee was established on December 13, 2011, and is composed of the following members of our board of directors,
all elected on November 6, 2017 for a term of office of two years, which will end at the annual general meeting for approval of
our financial statements for the fiscal year to end on June 30, 2019: (i) Eduardo S. Elsztain, (ii) Alejandro G. Elsztain and
(iii) Saul Zang. In accordance with our bylaws, the Executive Committee performs consultative assistance to the Board of Directors
with respect to its role as a supervisory body, advising the Board of Directors on, or periodically reviewing, certain strategic
or financial aspects of our business. Its activities include (A) advising the Board of Directors with respect to (i) our business
plan, (ii) changes to our authorized capital, (iii) strategic initiatives, our growth plan and investment initiatives and (iv)
any investments or dispositions over R$700 thousand; (B) reviewing annually (i) our financing initiatives, including with respect
to our securities, (ii) the financial implications of our financing strategy and (iii) our dividend policy; and (C) reviewing
and supervising periodically (i) the necessary financing for investments or activities in excess of R$700 thousand and (ii) our
accessing of the capital markets.



Executive
Officers



Pursuant
to our bylaws, we must have two to six executive officers who may or may not be shareholders. Our executive officers are elected
by our board of directors. We currently have two executive officers, who hold the following titles: chief executive officer and
chief operating officer, and chief administrative officer and investor relations officer. Our executive officers are elected for
a one-year term with the possibility of reelection, and they are required to remain in office until the election of their successors.
Under Novo Mercadoregulation, our executive officers are also required to sign an agreement to comply with the rules of
the Novo Mercadoprior to taking office.



Our
executive officers are our legal representatives and are responsible for our day-to-day management, implementation of the policies
and directives set by our board of directors and other duties assigned to them under the law and our bylaws. Our executive officers
are authorized to take all actions required for the operation of our business, unless the law or our bylaws specifically delegate
such authority to the shareholders’ meeting or our board of directors.



The
table below indicates the name, title, date of election and term of office of each of our current executive officers:



|Executive Officers       |  | Title                                                           |  | Date of most recent election |  | End of term of current
    office |  | Age
|------------------------ |  | --------------------------------------------------------------- |  | ---------------------------- |  | --------------------------------- |  | ---
|André
    Guillaumon     |  | Chief
    executive officer and Chief operating officer         |  | October
    11, 2017         |  | Late
    October, 2019            |  | 44 
|Gustavo
    Javier Lopez |  | Chief
    administrative officer and Investor relations officer |  | October
    11, 2017         |  | Late
    October, 2019            |  | 51 



At
a Board Meeting held on October 11, 2018, André Guillaumon and Gustavo Javier Lopez were re-elected as Chief Executive
Officer and Investor Relations Officer, respectively, with a term of office of one year until the first meeting of the Board of
Directors to be held after the annual general meeting for approval of our financial statements for the fiscal year to end on June
30, 2018 or until they are dismissed or replaced by the Board of Directors.



Below
is a brief biographical description of our executive officers:



André
Guillaumon. Mr. Guillaumon holds a bachelor’s degree in Agricultural Engineering from the Escola Superior de
Agricultura Luiz de Queiroz (ESALQ) of the Universidade de São Paulo in Piracicaba, Brazil. In 1996, he began his career
at Fertibrás S.A., where he worked directly in preparing and implementing fertilizer production and sales strategies. Mr.
Guillaumon also represented Fertibrás S.A. in technical forums, such as the 25th International Fertilizer Management Seminar
(Chicago, USA) and at the Fertilizer Quality Commission (ANDA). Mr. Guillaumon joined our Company in August 2007 as our Chief
operating officer. He became our Chief executive officer and Chief operating officer in August 2016.



Gustavo
Javier Lopez. Mr. Lopez joined Cresud in 1999 as budget manager. Since 2004, he has served as budget manager of IRSA.
Prior to joining IRSA, Mr. Lopez also worked for the Argentine company Estancias Unidas del Sud as its budget analyst and as accountant
for Loma Negra. He received an accounting degree from the Universidad de Buenos Aires. Mr. Lopez joined our Company in 2005 as
our Chief administrative officer. He became our Chief administrative officer and Investor relations officer in August 2016.



Agreements
with our Directors and Executive Officers



We
are not party to any agreement or obligations involving the members of our board of directors and our executive officers.



Family
Relationship among our Directors and Officers



Eduardo
S. Elsztain, the chairman of our board of directors, and Alejandro G. Elsztain, a member of our board of directors, are brothers.



Saul
Zang, who is a member of our board of directors, is Carolina Zang’s father.



| | B. | Compensation
| | -- | ------------



Pursuant
to our bylaws, the total amount of compensation paid to the members of our board of directors, fiscal council and executive officers,
in the aggregate, is set annually at the general shareholders’ meeting. Our directors, pursuant to the recommendation of
the compensation committee, allocate the aggregate compensation among our executive officers and directors. Although our executive
officers and board of directors are entitled to fixed compensation and a bonus depending on individual and company performance,
the compensation of the fiscal council members is fixed. The bonus is paid to our executive officers and directors based on the
achievement of certain individual and company targets.



The
aggregate compensation paid to our executive officers and members of our board of directors (including for service as members
of the compensation committee and executive committee) in the 2018 fiscal year was R$9.3 million, comprised of a fixed amount
of R$2.5 million and a bonus paid to our executive officers and members of our board of directors in the amount of R$6.8 million.
The bonus to the board was paid based on a recommendation of our compensation committee. The fixed amount paid to the members
of our fiscal council in the 2018 fiscal year was R$0.2 million.



Neither
we nor our subsidiaries have set aside any amount to provide pension, retirement or similar benefits.





48







Stock
Option Plan



Our
stock option plan was approved on October 29, 2008 for the benefit of the directors, executive officers and selected employees
of our company and our directly and indirectly controlled entities, and is limited to (2%) of our capital stock, including all
outstanding stock options (vested and unvested). Our board of directors manages our stock option plan and grants stock options
subject to the limits and restrictions of applicable regulation, our by-laws and the guidelines set forth in the shareholders’
meeting that approved it. Our board of directors approved our first grant of stock options under the plan on August 11, 2010,
with options with an exercise price of R$8.97 per share, which vested on August 11, 2012 and could be exercised within three years
thereafter. Our board of directors approved our second grant of stock options under the plan on July 3, 2012, with options with
an exercise price of R$8.25 per share, which vested on July 3, 2012 and may be exercised within five years thereafter. Our board
of directors approved our third grant of stock options under the plan on September 4, 2012, with options with an exercise price
of R$8.52 per share, which vested on September 4, 2014, and may be exercised within three years thereafter. No stock options have
been granted since September 5, 2012. In August 2015, our executive officers exercised stock options granted in the first tranche
representing 233,689 shares of our capital stock, which were delivered to them in October 2015. In September 2017, our executive
officers exercised stock options representing 218,108 shares of our capital stock, representing the remaining stock options granted
from the first, second and third tranches, which were delivered to them on October 2017. As of June 30, 2018, no additional stock
options had been exercised under either the second or third tranches. We do not expect to grant any further stock options under
our stock option plan.



Long
Term Incentive Plan based on Shares



Our
Long-Term Stock-Based Incentive Plan (“LTIP” or “Plan”) was approved at our general meeting held on October
2, 2017. Executive officers and other key employees are eligible for the Plan, however members of the Board of Directors are not
eligible.



In
establishing the Plan, the Company seeks to foster the achievement of the Company’s objectives, to strengthen the participants’
commitment in achieving the Company’s goals, resulting in a mid-term alignment of interests. Since the participants receive
our shares, this causes them to aim at improving the results the Company and appreciation of the price of our common shares, aligning
mid-term interests with the Company. Finally, there is a long-term alignment of interests, since the vesting period and the potential
for valuation of our common shares under the LTIP Plan also encourage participants to generate better long-term results, as well
as remain in the Company. The Plan helps retain key executives and key employees for a longer period, which is fundamental to
the Company’s long-term management and strategies.



The
Long-Term Stock-Based Incentive Program No. 1 (“Program No. 1”) was established under the Plan and was duly approved
at the Board of Directors meeting held on February 2, 2018.



| | C. | Board
                                         Practices
| | -- | --------------------------------------------------------



For
information about the date of expiration of the current term of office and the period during which each director and executive
officer has served in such office, see “Item 6—Directors, Senior Management and Employees—A. Directors and Senior
Management.”



Neither
we nor any of our subsidiaries have entered into a service contract with any of our directors that provide for benefits upon termination
of employment.



Fiscal
Council



Under
Brazilian corporate law, the Conselho Fiscal, or fiscal council, is a corporate body independent of our management and
our independent auditors. Its primary responsibilities are monitoring management activities, reviewing our financial statements,
and reporting its findings to our shareholders.



Under
an exemption pursuant to Rule 10A-3 under the Exchange Act regarding the audit committees of listed companies, a fiscal council
may exercise the required duties and responsibilities of a U.S. audit committee to the extent permissible under the Brazilian
corporate law.



To
comply with Rule 10A-3, the fiscal council must meet certain standards, including the following: (i) it must be separate from
the full board of directors; (ii) no executive officer may be a member; and (iii) Brazilian law must set forth standards for the
independence of the members. The fiscal council must also, to the extent permitted by Brazilian law, among other things: (A) be
responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal
controls or auditing; (B) have the authority to engage independent counsel and other advisors as it deems necessary to carry out
its duties; and (C) receive appropriate funding from the company for payment of compensation to the external auditors and advisors
as well as ordinary administrative expenses.



We
have modified our fiscal council to comply with the exemption requirements. Accordingly, the fiscal council operates
pursuant to its charter (regimento interno), which contemplates the activities described above to the extent permitted
by Brazilian law and is compliant with the requirements of the Sarbanes-Oxley Act and the applicable regulations and
requirements of the SEC. Because Brazilian corporate law does not permit the board of directors to delegate responsibility
for the appointment and removal of the external auditors and does not provide the fiscal council with the authority to
resolve disagreements between management and the external auditors regarding financial reporting, the fiscal council cannot
perform these functions. However, the fiscal council’s charter (regimento interno) provides the fiscal council
with the authority to submit recommendations to the board of directors for the appointment or removal of the external
auditors and their compensation.



Pursuant
to our bylaws, our fiscal council is permanent. The fiscal council’s members are elected at the annual shareholders’
meeting with a term of office that extends through the following annual shareholders’ meeting. Our fiscal council shall
be composed of three to five effective members and their alternates, who may or may not be shareholders. All members of our fiscal
council are also required to sign an agreement to comply with the Novo Mercadorules prior to assuming their roles.



In
addition, minority shareholders representing a minimum of 10% of our voting shares are entitled to elect one fiscal council member
and his or her alternate by a separate vote. Our fiscal council must not have members of our board of directors, our executive
officers, or our employees or of any subsidiary or a company under common control with us, or spouses or close family members
of our directors and officers. Brazilian corporate law requires fiscal council members to receive a remuneration of at least 10%
of the average annual amount paid to our officers, which excludes benefits and other allowances, or profit sharing, if any.





49







Our
fiscal council is currently composed of three members and three alternates.



The
table below indicates the name, title, date of election and term of office of each current member of our fiscal council:



|Fiscal
Council Members              | Position                            | Date
of Election     | End
of Current Term 
|----------------------------------- | ----------------------------------- | -------------------- | --------------------
|Fabiano
    Nunes Ferrari           | Fiscal
    Council member           | October
    16, 2018 | October
    16, 2019
|Ivan
    Luvisotto Alexandre        | Fiscal
    Council member           | October
    16, 2018 | October
    16, 2019
|Débora
    de Souza Morsch          | Fiscal
    Council member           | October
    16, 2018 | October
    16, 2019
|Daniela
    Gadben                  | Fiscal
    Council alternate member | October
    16, 2018 | October
    16, 2019
|Marcos
    Paulo Passoni            | Fiscal
    Council alternate member | October
    16, 2018 | October
    16, 2019
|Luciana
    Terezinha Simão Villela | Fiscal
    Council alternate member | October
    16, 2018 | October
    16, 2019



Below
is a brief biography of each member and alternate member of our fiscal council:



Fabiano
Nunes Ferrari. Mr. Ferrari holds a Law degree from the Catholic University of São Paulo (PUC-SP) and is a partner
at Suchodolski Law Firm, specialized in the fields of Corporate Law, International Law, Foreign Investments, Mergers and Acquisitions
and Contracts and Agreements. In the corporate law area, he has worked in several takeovers of companies and/or assets, due diligences,
shareholders’ agreements, joint ventures and corporate restructuring. He was formerly a lawyer at the Bryan Cave LLP law
firm in New York and is a member of the International Bar Association.



Ivan
Luvisotto Alexandre. Mr. Alexandre holds a Law degree from the University of São Paulo (USP) and a specialist
degree in Accountability applied to Law from the Getúlio Vargas Foundation in São Paulo (FGV-SP), as well as a specialist
degree in Information Technology Law from the Fundação Getúlio Vargas in São Paulo (FGV-SP). He is
a partner at Suchodolski Law Firm, with extensive experience in corporate planning and consultancy, M&As, international agreements
and transactions, having assisted Brazilian and foreign companies in structuring their investments in Brazil or abroad. He has
also been the Legal Director of the Brazil-Israel Chamber of Commerce and Industry since 2010.



Marcos
Paulo Passoni. Mr. Passoni holds a Law degree from the Catholic University of São Paulo and a Master degree
in Diffuse Rights from Unimes. He is a partner at Suchodolski Law Firm and specializes in the fields of Civil Law and Litigation.
He was a member of the board of OAB-SP (the Bar Association of the State of São Paulo). He is also a professor of Civil
Litigation Procedure in the Superior School of Advocacy.



Daniela
Gadben. Ms. Gadben holds a Law degree from the University of São Paulo (USP) and an LLM degree from the London
School of Economics and Political Science. She is an attorney at Suchodolski Law Firm, specializing in the fields of Corporate
Law and International Law.



Débora
de Souza Morsch. Ms. Morsch graduated in Civil Engineering and Administration from Universidade Federal do Rio Grande
do Sul (UFRGS). Ms. Morsch has a specialist degree in Capital Markets from Associação dos Analistas e Profissionais
de Investimento do Mercado de Capitais (Apimec- UFRGS) and in Construction Management from UFRGS. Ms. Morsch is a partner and
director at Zenith Asset Management and has been a member of the board of Electro Aço Altona S/A.



Luciana
Terezinha Simão Villela. Ms. Villela holds a Law degree from the Catholic University of São Paulo and
a Master degree in Tax. She is an associate attorney at Suchodolski Law Firm, and specializes in the fields of Taxes and Administrative
Law.



All
the current members and alternates of our fiscal council are up for reelection at the shareholder meeting held on October 2, 2017.



For
information about the compensation committee, see “Item 6—Directors, Senior Management and Employees—Directors
and Senior Management—Board Committees.”



| | D. | Employees
| | -- | ---------



The
table below shows the evolution of the total number of our employees for the period indicated:



|                                             |  | As of June 30, |    
|-------------------------------------------- |  | -------------- | ---
|Location                                     |  | 2016           |    
|Head Offices/São Paulo                       |  |                | 58 
|Araucária Farm                               |  |                | 11 
|Alto Taquari Farm (and Partnership III Farm) |  |                | 8  
|Chaparral Farm                               |  |                | 23 
|Nova Buriti Farm                             |  |                | 3  
|Jatobá Farm                                  |  |                | 14 
|Preferência Farm                             |  |                | 5  
|Partnership II                               |  |                | 16 
|São José Farm (and Partnership IV Farm)      |  |                | —  
|Total                                        |  |                | 138



50









|             |  | As
of June 30, |   
|------------ |  | -------------- | --
|Location     |  | 2016           |   
|Goiás        |  |                | 11
|Mato Grosso  |  |                | 8 
|Bahia        |  |                | 42
|Piauí        |  |                | 16
|Maranhão     |  |                | — 
|Minas Gerais |  |                | 3 
|Total        |  |                | 80



The
decrease in the total number of employees for the year ended June 30, 2018 was mainly due to the fact that the farms in Bahia
and Maranhão needed several temporary employees to prepare the land for cultivation and that number fluctuates during the
season.



All
of our employees are located in Brazil, and we do not employ a material number of temporary employees.



Compensation and
benefits



Our
compensation policy for our employees is based on legal and market rates of compensation, as well as merit-based increases in
individual employees’ compensation, based on individual goals set for such employees and administered and monitored by our
human resources department. We are also party to agreements, entered into with unions representing our employees, providing for
employee profit-sharing arrangements (programa de participação nos resultados), pursuant to which all of
our employees receive annual bonuses based on our financial and operating results, as well as personal goals set for individual
employees. Finally, we also seek to retain quality personnel through offering benefits such as health and dental care, life insurance,
meal vouchers, transportation and lodging, as well as job and technical training and subsidies for post-graduate, business administration
and language courses. We also employ security officers at each of our agricultural properties, in an effort to maintain safe working
conditions for employees contracted through our third-party service providers, including through regular workplace safety training
programs.



Relationship
with unions



We
believe we have good relationships with our employees and the unions that represent them. The table below summarizes the agreements
entered into between us and the unions representing our employees as of June 30, 2018.



|Branch
    Office  |  | Union                                                                  |  | Agreement(s)                                        |  | Agreement
    Expiration Date
|------------------ |  | ---------------------------------------------------------------------- |  | --------------------------------------------------- |  | -----------------------------
|Head
    Office    |  | Sindicato
    dos Trabalhadores Rurais de São Paulo                    |  | Profit
    Sharing Program Overtime compensation(1) |  | Under
    negotiation        
|Chaparral          |  | Confederação
    Nacional dos Trabalhadores Assalariados Rurais        |  | Profit
    Sharing Program Overtime compensation(1) |  | 02/28/2019                   
|Jatobá             |  | Confederação
    Nacional dos Trabalhadores Assalariados Rurais        |  | Profit
    Sharing Program Overtime compensation(1) |  | 02/28/2019                   
|Preferência        |  | Confederação
    Nacional dos Trabalhadores Assalariados Rurais        |  | Profit
    Sharing Program Overtime compensation(1) |  | 02/28/2019                   
|Partnership
    II |  | Confederação
    Nacional dos Trabalhadores Assalariados Rurais        |  | Profit
    Sharing Program Overtime compensation(1) |  | Under
    negotiation        
|Araucária          |  | Federação
    dos Trabalhadores na Agricultura do Estado de MT         |  | Profit
    Sharing Program Overtime compensation(1) |  | 04/30/2019                   
|Alto
    Taquari   |  | Federação
    dos Trabalhadores na Agricultura do Estado de MT         |  | Profit
    Sharing Program Overtime compensation(1) |  | 04/30/2019                   
|São
    José       |  | Sindicado
    dos Trabalhadores Rurais de São Raimundo das Mangabeiras |  | Profit
    Sharing Program Overtime compensation(1) |  | 08/31/2019                   
|Nova
    Buriti    |  | Sindicato
    dos Trabalhadores Rurais de São Paulo                    |  | Profit
    Sharing Program Overtime compensation(1) |  | 01/31/2019                   










(1)
Refers to offsetting overtime with down time instead of paying overtime compensation (“banco de horas”) in accordance
with Brazilian law.





51







| | E. | Share
                                         Ownership
| | -- | --------------------------------------------------------



The
following table indicates the number of our common shares and stock options directly held by each of our directors, executive
officers and members of fiscal council as of September 30, 2018.



|Name                                              |  | Number
of Common Shares |  | Percentage
                                         of Shares
        Outstanding |  | Stock
                                         Options awarded and
        not
exercised
|------------------------------------------------- |  | ----------------------- |  | --------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|Executive
    Officers 
Gustavo Javier Lopez      |  | 43,313                  |  | *                                                                                 |  |                                                                                         
|André
    Guillaumon                              |  | 109,054                 |  | *                                                                                 |  |                                                                                         
|Directors
        Eduardo
        S. Elsztain(1)  |  | 23,310,900              |  | 40.98                                                                             |  |                                                                                         
|Alejandro
    G. Elsztain                         |  | 189,500                 |  | *                                                                                 |  |                                                                                         
|Saul
    Zang                                     |  | 100                     |  | *                                                                                 |  |                                                                                         
|Isaac
    Selim Sutton                            |  | 100                     |  | *                                                                                 |  |                                                                                         
|João
    de Almeida Sampaio Filho                 |  | 100                     |  | *                                                                                 |  |                                                                                         
|Ricardo
    de Santos Freitas                     |  | 0                       |  | 0                                                                                 |  |                                                                                         
|Carlos
    María Blousson                         |  | 0                       |  | 0                                                                                 |  |                                                                                         
|Alejandro
    Casaretto                           |  | 0                       |  | 0                                                                                 |  |                                                                                         
|Robert Gibbins(2)                                 |  | 8,269,900               |  | 14.54                                                                             |  |                                                                                         
|Fiscal
    Council Members 
Fabiano Nunes Ferrari |  | 0                       |  | 0                                                                                 |  |                                                                                         
|Ivan
    Luvisotto Alexandre                      |  | 0                       |  | 0                                                                                 |  |                                                                                         
|Débora
    de Souza Morsch                        |  | 3,000                   |  | *                                                                                 |  |                                                                                         






*
Represents less than 1%.



|(1) | Includes
                                         shares held of record by Cresud, Agro Investment and Agro Managers. See “Item 7—Major
                                         Shareholders and Related Party Transactions.”
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes
                                         shares held of record by Autonomy Capital (Jersey) LP. Autonomy Master Fund Limited is
                                         controlled by Autonomy Capital (Jersey) LP, which is managed by Robert Gibbins See “Item
                                         7—Major Shareholders and Related Party Transactions.”
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our
directors, executive officers and members of our Fiscal Council do not have different voting rights.



For
information about our Stock Option Plan, see “Item 6—Directors, Senior Management and Employees—Compensation—Stock
Option Plan.



ITEM
7—MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS



The
table below sets forth information relating to the ownership of our common shares as of September 30, 2018.



|Shareholder                                                                               |  | Number
of Common Shares |            |  | Percentage
(%) |  |       | Number
of Common Shares (including warrants)(5) |  |  | Percentage
(%) (including warrants)(4) | 
|----------------------------------------------------------------------------------------- |  | ----------------------- | ---------- |  | -------------- |  | ----- | ----------------------------------------------- |  |  | -------------------------------------- | 
|Cresud(1)                                                                                 |  |                         | 23,150,050 |  |                |  | 40.69 |                                                 |  |  | 32,983,610                             | 
|Agro Investment and Agro Managers(2)                                                      |  |                         | 160,750    |  |                |  | 0.28  |                                                 |  |  | 403,195                                | 
|Autonomy Capital (Jersey) LP(3)                                                           |  |                         | 8,269,900  |  |                |  | 14.54 |                                                 |  |  | 8,269,900                              | 
|Elie Horn/Cape Town(4)                                                                    |  |                         | 3,274,600  |  |                |  | 5.76  |                                                 |  |  | 6,830,157                              | 
|Cape Town LLC                                                                             |  |                         | 2,640,300  |  |                |  | 4.64  |                                                 |  |  | 6,195,857                              | 
|Elie Horn                                                                                 |  |                         | 634,300    |  |                |  | 1.11  |                                                 |  |  | 634,300                                | 
|Directors and Executive Officers (other than Mr. Eduardo Elsztain and Mr. Robert Gibbins) |  |                         | 342,167    |  |                |  | 0.60  |                                                 |  |  | 342,167                                | 
|Treasury                                                                                  |  |                         | 3,086,748  |  |                |  | 5.43  |                                                 |  |  | 3,086,748                              | 
|Others                                                                                    |  |                         | 18,604,701 |  |                |  | 32.70 |                                                 |  |  | 19,195,368                             | 
|Total                                                                                     |  |                         | 56,888,916 |  |                |  | 100.0 |                                                 |  |  | 71,111,145                             | 








|(1) | As
                                         of September 30, 2018, Mr. Eduardo S. Elsztain holds (through companies controlled by
                                         him and proxies) a majority voting power in IFIS Limited, which owns 100% of the capital
                                         stock of IFISA, which holds 21.97% of the capital stock of Cresud. In addition to this,
                                         Mr. Eduardo S. Elsztain indirectly holds 85% of the capital stock of Agro Investment
                                         S.A., which holds 12.75% of the capital stock of Cresud. Finally, Mr. Elsztain directly
                                         holds 0.02% of the capital stock of Cresud. Because of his ownership interest in IFIS
                                         Limited and IFISA, Mr. Eduardo Elsztain may appoint the majority of our board of directors
                                         and the board of directors of Cresud, as well as determine the substantive outcome of
                                         all decisions requiring shareholder approval with respect to Cresud. Accordingly, Mr.
                                         Elsztain may be deemed to beneficially own the shares held by Cresud and hold the sole
                                         voting and dispositive power with respect to these shares.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes
                                         19,300 shares held by Agro Investment, of which 21 shares are held by a company controlled
                                         by Cresud’s controlling shareholder (Mr. Eduardo Elsztain), and 19,279 shares are
                                         in the process of being transferred to another shareholder; 141,450 shares held by Agro
                                         Managers, a company owned by Cresud. Mr. Eduardo Elsztain may be deemed to hold the sole
                                         voting and dispositive power with respect to the shares held of record by Agro Investment,
                                         and Cresud may be deemed to hold the sole voting and dispositive power with respect to
                                         the shares held of record by Agro Managers.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Such
                                         shares were acquired and are held as a hedge for total return swap transactions involving
                                         the same number of our common shares entered into between Credit Suisse Securities (Europe)
                                         Limited and Autonomy Master Fund Limited. Autonomy Master Fund Limited is controlled
                                         by Autonomy Capital (Jersey) LP, which is managed by Robert Gibbins, a member of our
                                         board of directors. The swap transaction matures on March 25, 2019.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Includes
                                         shares jointly held by Elie Horn and Cape Town LLC. Elie Horn is the principal shareholder
                                         of Cape Town LLC.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Gives
                                         effect to the potential issuance of 14,222,229 common shares in connection with the 256,000
                                         first issuance warrants that may be exercised until April 27, 2021. All warrants are
                                         held by Cresud, Agro Investment, Agro Managers and Cape Town LLC. See “Item 10—Additional
                                         Information—Description of Outstanding Warrants.”
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For
information about stock options held by our directors and executive officers, see “Item 6.E. Directors, Senior Management
and Employees – Share Ownership.”



Our
controlling and major shareholders do not have different voting rights.



Controlling
Shareholder



Cresud



Cresud
was organized in December 1936 under the laws of Argentina. Cresud’s principal operating activities consist of the acquisition,
development and sale of agricultural properties in Argentina, and the production of agricultural products. Its shares are listed
on the Buenos Aires Stock Exchange (Bolsa de Comercio de Buenos Aires) and on the Nasdaq (under the symbol CRESY).



As
of September 30, 2018, Mr. Eduardo S. Elsztain holds (through companies controlled by him and proxies) a majority voting power
in IFIS Limited, which owns 100% of the capital stock of IFISA, which holds 21.97% of the capital stock of Cresud. In addition
to this, Mr. Eduardo S. Elsztain indirectly holds 85% of the capital stock of Agro Investment S.A., which holds 12.75% of the
capital stock of Cresud. Finally, Mr. Elsztain directly holds 0.02% of the capital stock of Cresud. Because of his ownership interest
in IFIS Limited and IFISA, Mr. Eduardo Elsztain may appoint the majority of our board of directors and the board of directors
of Cresud, as well as determine the substantive outcome of all decisions requiring shareholder approval with respect to Cresud



As
a result of Cresud’s ownership interest in us, conflicts of interest could arise with respect to transactions involving
our ongoing business activities, and the resolution of these conflicts may not be favorable to us. Specifically, business opportunities,
including but not limited to potential targets for rural property acquisitions may be attractive to both Cresud and us. In addition,
five of our nine directors have been nominated by Cresud. This situation may give rise to conflicts of interest. We may not be
able to resolve any potential conflicts and, even if we do so, the resolution may be less favorable to us than if we were dealing
with an unaffiliated party.



52







| | A. | Other
                                         Major Shareholders
| | -- | -----------------------------------------------------------------



Autonomy
Capital (Jersey) L.P.



Asset
management founded in 2003 by Robert Gibbins with six offices across the world.



Elie Horn and Cape Town LLC



Elie
Horn is the sole shareholder of E.H. Capital Management Ltd., which is the principal shareholder of Cape Town LLC, a company organized
under the laws of the State of Delaware. Elie Horn is the president and controlling shareholder of Cyrela Brazil Realty S.A.,
and has more than 40 years of experience in construction and management of commercial buildings in São Paulo and Rio de
Janeiro, Brazil, as well as in selling and leasing luxury and high-technology business offices, and finally, to a lesser extent,
in the leasing and management of shopping malls. In recent years, Mr. Horn has also been involved in the development of residential
condominiums. Mr. Horn previously served as a member of our board of directors, elected at the general shareholders’ meeting
held on October 27, 2011, and retired from the board on July 3, 2012.



Agro
Investment and Agro Managers



Agro
Investment and Agro Managers are companies organized under the laws of Argentina, controlled by Cresud ́s controlling
shareholder (Mr. Eduardo Elsztain) and Cresud, respectively. Agro Investment and Agro Managers hold 0.25% of our shares and
Agro Managers holds 1.70% of our warrants.



Major
Changes in Share Ownership



Purchase
and Sale of our Common Shares by Banco Fator



On
December 16, 2015, CSHG Commodities Fundo de Investimento Multimercado - Crédito Privado sold 1,611,000 of our common shares
through the B3. Prior to the sale, it held 3,652,900, or 3.4% of our outstanding common shares. Immediately after the sale, it
held 2,041,900, or 3.5%, of our outstanding common shares.



Purchase
and Sale of our Common Shares by Autonomy Capital (Jersey) LP



On
November 13, 2015, Autonomy Capital (Jersey) LP (“Autonomy Capital”) bought 1,668,800 of our common shares through
the B3. Prior to the acquisition, Autonomy held 2,231,500, or 3.8%, of our outstanding common shares. Immediately after the acquisition,
it held 3,900,300, or 6.7%, of our outstanding common shares.



On
February 10, 2016, Autonomy Capital bought 4,330,000 of our common shares through the B3. Prior to the acquisition, Autonomy held
4,455,300, or 7.7%, of our outstanding common shares. Immediately after the acquisition, it held 8,785,300, or 15.1%, of our outstanding
common shares.



On
April 27, 2016, Autonomy Capital sold 79,400 of our common shares through the B3. Prior to the sale, Autonomy held 8,785,300 or
15.1%, of our outstanding common shares. Immediately after the sale, it held 8,705,900, or 15.0%, of our outstanding common shares.



On
September 19, 2017, Autonomy Capital sold 600,000 of our common shares through the B3. Prior to the sale, Autonomy held 5,765,200
or 10.13%, of our outstanding common shares. Immediately after the sale, it held 5,165,200 or 9.08%, of our outstanding common
shares.



On
September 22, 2017, Autonomy Capital bought 2,566,800 of our common shares through the B3. Prior to the sale, Autonomy held 5,165,200
or 9.08%, of our outstanding common shares. Immediately after the sale, it held 7,732,000 or 13.59%, of our outstanding common
shares.



On
October 6, 2017, Autonomy Capital sold 2,263,790 of our common shares through the B3. Prior to the sale, Autonomy held 7,732,000
or 13.59%, of our outstanding common shares. Immediately after the sale, it held 5,468,210 or 9.61%, of our outstanding common
shares.



Purchase
and Sale of our Common Shares by JP Morgan Whitefriars Inc.



On
November 13, 2015, JP Morgan Whitefriars bought 1,668,800 of our common shares through the B3. Prior to the acquisition, JP Morgan
Whitefriars held 2,231,500, or 3.8%, of our outstanding common shares. Immediately after the acquisition, it held 3,900,300, or
6.7%, of our outstanding common shares.



On
February 18, 2016, JP Morgan Whitefriars sold 3,900,300 of our common shares through the B3. Prior to the sale, JP Morgan Whitefriars
held 3,900,300 or 3.8%, of our outstanding common shares. Immediately after the sale, it held zero, or 0.0%, of our outstanding
common shares.



ADRs



On
September 30, 2018, we had 10,481,281 shares representing ADRs, which were held in the United States by one holder of record.



|B. | Related
Party Transactions
|-- | --------------------------



We
adhere to the corporate governance practices recommended and required under applicable law, including under the rules and regulations
of the Novo Mercadoand the B3 and Brazilian corporate law.



Decisions
made regarding our operations are supervised by our board of directors and fiscal council in accordance with our bylaws and applicable
law. Our bylaws provide that provision of services and consulting contracts entered into among us or our affiliates, on the one
hand, and shareholders that, individually or in the aggregate, own at least 10% of our capital stock shall be submitted by our
board of directors for shareholder approval at our general meeting.



Contracts
entered into with related parties are negotiated individually and are analyzed in comparison with the market conditions of the
applicable region. Along these lines, all transactions entered into with related parties should be documented, including their
principal terms such as price, term limit, interest rates, and the respective rights and obligations of the parties, and such
terms should be consistent with those prevailing in the market.



We,
our shareholders, our directors and officers, and the members of our fiscal council, when active, should submit to arbitration
for any dispute relating to the application, legality, effectiveness, interpretation, violation and effects of violation of the
provisions in the agreement for participation in the Novo Mercadolisting segment, and to the Novo Mercadolisting
rules, the arbitration regulation instituted by the B3, the provisions of Brazilian corporate law, our bylaws, the rules of the
National Monetary Council, or Conselho Monetário Nacional (“CMN”) and the Central Bank, the regulations of
the Securities Commission, or Comissão de Valores Mobiliários (“CVM”), and the B3 and other rules generally
applicable to the Brazilian capital markets. Any such dispute should be settled by arbitration carried out before B3 Arbitration
Chamber.



According to Chapter 12 of these rules, the parties may consent to agree to use another arbitration chamber or forum to
resolve their disputes.





53







Cresca
Acquisition and dissolution



Purchase
of interest in joint venture, debts and advisory contract with Cresca S.A.



On
December 12, 2013, BrasilAgro executed contracts with Cresud for: (i) the acquisition of 50% interest in Cresca S.A., (ii) the
assumption of Cresud credits from Cresca, and (iii) the execution of an advisory contract pursuant to which Cresud has agreed
to render services in the forest agricultural exploration to Cresca in exchange for payments of fees.



Cresca
is a company that invests in agricultural and cattle raising land in Paraguay. At the purchase date, it owned approximately 81,000
hectares and a contract for the right to purchase approximately 61,000 additional hectares of agricultural land in the region
of Mariscal Estigarribia in Paraguay.

Pursuant
to the agreement, Cresca purchased 35,864 hectares on July 9, 2014 and the remaining 24,753 on January 20, 2015.



On
April 7, 2014, Cresca sold 24,624 undeveloped hectares.



On
October 5, 2016, we entered into an agreement with Carlos Casado, our partner in Cresca at the time, pursuant to which we agreed
to try to sell all the land that Cresca owned for a 120-day period as of the execution date of the aforementioned agreement. Further
to the provisions of the agreement, we and Carlos Casado also agreed to split ownership of the land among us and Carlos Casado
if either party failed to dispose of the totality of the land within the 120-day period.



As
the properties were not sold to third-parties, on June 6 and June 8, 2017, we and Carlos Casado decided to proceed with the spin-off
of Cresca, whereby we would separate and divide the assets and liabilities of Cresca, and Cresca would distribute them to us and
to Carlos Casado.



As
a result of this transaction, we now have the following two subsidiaries that received Cresca’s assets and liabilities:
(i) Palmeiras, which was incorporated to operate the activities of our investment in Cresca and (ii) Moroti, a subsidiary that
received, on February 9, 2018, upon conclusion of the formal spin-off process, all other assets and liabilities of Cresca attributed
to BrasilAgro, including land and debts.



On
February 9, 2018, the spin-off of Cresca was concluded and the portion of assets and liabilities attributed to the Company was
transferred to the wholly-owned subsidiary Moroti.



As
part of the spin-off, the Company and Carlos Casado, partners in the joint venture, decided to waive the interest for late payment
on the intercompany loans taken by Cresca in the total amount of R$32,9 million, of which BrasilAgro’s share was R$16,6
million. See Note 23 to our financial statements for the fiscal year ended June 30, 2018.



As
of June 30, 2018, Moroti owns 59,490 hectares of which 29,745 were arable. For more information, see Note 1.1 to the financial
statements included in this annual report on Form 20-F.



|C. | Interests
of experts and counsel
|-- | --------------------------------



Not
applicable.



ITEM
8—FINANCIAL INFORMATION



|A. | Consolidated
Statements and Other Financial Information
|-- | -------------------------------------------------------



See
“Item 18—Financial Statements” below.



Legal
Proceedings



We
and our subsidiaries are subject to legal and administrative proceedings involving environmental, labor, civil, tax and criminal
matters. As of June 30, 2018, we were defendants in 81 pending legal and administrative proceedings, of which 13 are environmental
proceedings, 45 are labor proceedings, 9 are tax proceedings, 12 are civil proceedings, and 2 are criminal proceedings. Also,
as of June 30, 2018, we were plaintiffs in 15 pending legal and administrative proceedings, of which one is an environmental proceeding,
7 are tax proceedings and 7 are civil proceedings.



As
of June 30, 2018, we had total provisions of R$1.2 million for probable losses, including R$990 thousand for labor proceedings,
R$195 thousand for tax proceedings and R$22 thousand for environmental proceedings. We believe that our provisions for contingencies
suffices for purposes of covering probable losses that may result from the proceedings to which our Company and our subsidiaries
are parties, based on the opinion of our external legal advisors.



The
labor proceedings include claims filed by former employees and third-party contractors. In most cases, the Company and its subsidiaries
are jointly liable for claims by third party contractors, since the discussion involves possible rights between outsourcing companies
and their former employees. See “Item 3— Key Information—Risk Factors—Risks Relating to our Business and
Industry—We are dependent on third-party service providers and subject to recent changes in the Brazilian labor legal framework.”



We
do not expect probable losses to result from our civil and criminal proceedings currently in progress.



Among
our legal and administrative proceedings as of June 30, 2018, we have identified the following material contingencies in view
of the adverse effects that they could have on our activities and/or the amount involved in the claims (we considered material
for this purpose all legal and administrative proceedings filed against the Company involving amounts exceeding R$500 thousand):



Civil
Proceedings



We
are defendants in a civil claim filed on June 10, 2009 by Mr. José Pereira de Souza and others in the Judicial District
Court of Correntina, State of Bahia, for the annulment of the deed of sale and purchase of agricultural property executed by and
among our Company and others. We have filed our defense and await the decision. The total amount involved in the claim is R$4.5
million and our chance of loss is estimated as possible. If we are unsuccessful we could be required to relinquish the equivalent
of 2,561,681 hectares of land corresponding to 6.9% of the total area of Chaparral farm. We have not made any provision in connection
with this proceeding.





54







We
are co-defendants in an action for damages brought on March 14, 2013 by Liliana Marchio Silva, widow of Hailton Paz da Silva,
who died in a car accident on August 29, 2011 involving a truck used by one of our service providers for the cutting, loading
and transportation of sugar-cane produced in our Araucaria farm. We filed our defense on March 19, 2013, and we are waiting for
the summoning of Mr. Ronaldo Rodrigues de Souza to be co-defendant on the proceeding. We are also waiting for the decision that
will start the evidence phase in the proceedings. The total amount involved in the suit, as claimed by the plaintiff, is R$1.4
million and our chances of loss have been classified as possible. We have not made any provision in connection with this proceeding.



We
are defendants in an injunction lawsuit filed by Mundo dos Cereais on May 10, 2010 seeking to void an out-of-court promissory
note that BrasilAgro presented to a notary public for collection against Mundo dos Cereais issued to guarantee Mundo dos Cereais’
acknowledgement of debt in a principal amount of R$847 thousand and relating to an agreement for the purchase of rice. On October
25, 2016, the trial judge issued an order dismissing the lawsuit. Despite the fact that the lawsuit has been dismissed, we filed
a motion for clarification to reinstate the effects of our presentation of the promissory note for collection. We are currently
waiting for a decision on our motion for clarification.



Tax
Proceedings



On
June 30, 2018, the Company has judicial and administrative tax claims in the amount of R$3.8 million mainly related to proceedings
whose merit is related to: (i) notice of infraction issued for the collection of ICMS tax credits based on the understanding that
the Company would have remitted primary products to exporter companies with the specific purpose of exporting, alleging that such
products would not have been remitted abroad in the period of 180 days from the shipment of goods; and (ii) the reversal of a
court order that partially approved negative income tax credits for the fourth quarter of 2007 and, as a consequence, did not
approve offsets made by the Company relating to such credits. We have not made any provision in connection with these tax proceedings.



Also,
we are plaintiffs in judicial and administrative claims in the aggregate amount of R$ 1.8 million mainly related to proceedings
whose merit is related to: (i) suspension of INCRA, SEBRAE and FNDE contributions; and (ii) the annulment of tax credits related
to monthly estimates of IRPJ and CSLL for January 2012.



Environmental
Proceedings



We
were defendants in an environmental administrative claim filed on November 25, 2009 by the Environmental Protection Board for
the Brazilian Institute for the Environment and Natural Renewable Resources (Ibama) involving the total amount of R$4.8 million
under the argument that we have deforested a permanent preservation area. The Ibama notified us on October 8, 2012 that it had
rejected our defense. In October 2012, we filed an appeal to this decision, which was also rejected. On September 13, 2013, we
filed a lawsuit before the federal courts of Goiás, for annulment of the infraction notice and cancellation of the fine.
On October 15, 2013, we placed a court deposit on the amount equivalent to the fine imposed, in order to obtain the granting of
injunction relief to suspend the payment of the fine until the end of the lawsuit. Due to the court deposit, the payment of the
fine is suspended until final judgment in the case. In June 2015, a favorable decision was enacted in the first instance, decreasing
the annulment of the infraction notice and cancellation of the fine. Ibama has submitted an appeal in order to revert such decision.
On March 30, 2016, we filed a petition requesting the replacement of the deposit for a letter of guarantee corresponding to the
amount of R$7.94 million (updated value of the deposit plus 30%, according to the article 848 of the Brazilian Civil Procedure
Code). On August 29, 2016, the court granted the replacement of the guarantee. On September 9, 2016, Ibama filed an appeal against
such decision and, on December 16, 2016, BrasilAgro filed its answer to Ibama’s appeal. On June 1, 2017, BrasilAgro filed
a motion requesting the enforcement of replacement of guarantee. On June 5, 2017, the court allowed BrasilAgro to withdraw the
judicial deposit in the amount of R$ 5.75 million. On June 11, 2018, BrasilAgro filed a motion requesting the replacement of the
letter of guarantee by an insurance letter. We are currently awaiting a ruling on Ibama’s appeals. Considering there has
been a favorable decision at the lower court level in this particular lawsuit, our chances of loss have been classified as remote.



Labor
Proceedings



We
are co-defendants in a labor judicial claim filed on June 17, 2016 by Laiane Fernandes da Silva and Agnaldo Fernandes involving
a revised amount of R$824 thousand. The lawsuit seeks to annul outsourcing or certain work and the payment of actual and moral
damages. The lawsuit has been suspended by a judge order on the ground that there is a pending discussion on plaintiffs’
standing to sue. We have not made any provision in connection with this proceeding.



Administrative
Proceedings involving our Controlling Shareholder and Directors



On
July 1, 2017, the Office of Public Company Supervision of the CVM pressed charges relating to insider trading against the Company
and two of its executive officers, due to transactions with shares issued by the Company during the so-called “blackout
period” set forth under paragraph 4, article 13, of CVM Rule No. 358/2002. According to said charges, considering the moment
of the transaction (just before the disclosure of the Company’s earnings releases for the quarter ended on September 30,
2016), it would be possible to “assume that the transactions were made based on information that could be considered material,”
which would have generated an alleged and potential financial profit to the Company of less than R$7,000 (seven thousand Reais).
Based on that, the Company has submitted, along with the executive officers, the defense on September 6, 2017, by means of which
we explained the reasons why we believe there was no use of material information, nor was there the intention of gaining profit
based on that information. In this same opportunity, and pursuant Law No. 6.385, of December 8, 1976, and the CVM Resolution No
390, of May 8, 2001, we kept open the possibility to eventually present a proposal of settlement agreement. On October 6, 2017,
we filed a proposal for settlement with CVM. On March 27, 2018, CVM’s board approved BrasilAgro’s proposed settlement
agreement, which provided for the payment of a fine by the Company and the executive officers in the aggregate amount of R$190
thousand. On June 26, 2018, CVM dismissed the administrative proceeding followed compliance by BrasilAgro and its executive officers
with their obligations under the settlement agreement.



Our
controlling shareholder, Cresud, and some of our directors are involved in some legal proceedings, which may have a material adverse
effect on us. A brief description of these proceedings is provided below:





On
February 23, 2016, a class action was filed against IRSA, Cresud, and certain managers and directors with the U.S. District Court
for the Central District of California. The complaint was amended on February 13, 2017. As amended, the complaint, filed on behalf
of investors who purchased or acquired Global Depositary Receipts of IRSA between February 11, 2015 and December 30, 2015, claims
alleged violations of U.S. federal securities laws. In addition, it argues that defendants have made material misrepresentations
and omissions related to the Company’s investment in IDB Development Corporation Ltd. (“IDBD”) Such complaint
was withdrawn on May 4, 2016 by the plaintiff and re-filed on May 9, 2016 with the U.S. District Court for the Eastern District
of Pennsylvania.



55







Furthermore,
IRSA and Cresud and certain of their managers and directors are defendants in a class action filed on April 29, 2016 with the
U.S. District Court for the Eastern District of Pennsylvania. The complaint was amended on February 13, 2017. As amended, the
complaint, filed on behalf of investors who purchased or acquired Global Depositary Receipts of Cresud between February 11, 2015
and December 30, 2015, alleges violations of U.S. federal securities laws. In addition, it argues that defendants have made material
misrepresentations and omissions related to the investment of the Company’s subsidiary, IRSA, in IDBD.



On
September 10, 2018, the Court granted IRSA and Cresud’s motion to dismiss the class action filed against Cresud and Irsa
in its entirety. Plaintiffs have appealed such order and the Court’s decision is pending.



The
companies hold that such allegations are meritless and will continue to defend both class actions.



In
June 2015, an application to approve an action as a class action was filed with the Central District Court in Lod, Israel, against
IDBD, Dolphin Netherlands BV (IDBD’s controlling shareholder), C.A.A. Extra Holdings Ltd. (IDBD’s former controlling
shareholder, or “CAA”), and current and former directors, including alternate directors (including, among others,
Messrs. Eduardo Elsztain, Sholem Lapidot, Saul Zang and Mauricio Wior) (the “Defendants”). The complaint alleges that
they hold shares in IDBD and that they are creditors of a debt arrangement with IDB Holdings Corporation Ltd. (the “Plaintiffs”
and “Debt Arrangement,” respectively) raising, among others, claims regarding the conduct of IDBD’s controlling
shareholders and of its board of directors in connection with the expiration of a transaction for the sale of IDBD’s holdings
in Clal Insurance Enterprises Holdings Ltd. (“Clal Insurance”) in May 2014 and in connection with a rights issuance
by IDBD in July 2014 and February 2015. In March 2016, the Claimant filed a motion to dismiss the class action application and,
in June 2016, the Court partially accepted the motion and ordered the Plaintiffs to file an amended class action application that
would include only the allegations and remedies with respect to the Clal Insurance transaction. In August 2016, the Defendants
filed a motion to appeal (regarding the part of decision that did not dismiss the allegations concerning the Clal Insurance transaction)
and the Plaintiffs filed an appeal (regarding the part of the decision that dismissed the allegations concerning the rights issuance)
both with the Israeli Supreme Court. In November 2017, the Supreme Court dismissed both appeals. Following the dismissal of the
appeal proceedings by the Supreme Court, the Plaintiffs filed an amended application for approval as a class action against the
Company, Mr. Eduardo Elsztain, Dolphin Netherlands B.V., Mr. Mordechai Ben Moshe, a former controlling shareholder of IDBD, and
against CAA, on the grounds of damage, which the Plaintiffs allege was caused as a result of the impairment of rights in connection
with the Debt Arrangement (and in particular in connection with the expiration of a transaction for the sale of the Company’s
holdings in Clal Insurance Enterprises Holdings Ltd. in May 2014 and an alternative Clal transaction). On January 2018, the Plaintiffs
filed an amended class action application against IDBD, Dolphin, Mr. Elsztain, CAA and Mr., Ben Moshe. The plaintiffs seek to
represent in the amended application all former creditors of IDBH, who were entitled to receive payment, whether in IDBD shares
or in cash, in accordance with the creditor’s arrangement. The class action plaintiffs allege in the amended application,
among other things, that IDBD and its controlling shareholders acted in order to frustrate the transaction for the sale of IDBD’s
holdings in Clal Insurance Enterprises Holding Ltd. to JT Capital Fund Pte. to serve the interests of the controlling shareholders.
The class action plaintiffs further allege that this conduct caused them and members of the amended group significant damage,
since it is their position that under the terms of the creditor’s arrangement they were expected to receive greater consideration
in case the Clal transaction was completed. The estimated damage was set at NIS 413 million. The class action plaintiffs further
argue that, after the Clal transaction failed in May 2014, the controlling shareholders allegedly did not try to pursue an alternative
transaction, thus causing the group members damage, in a total sum of NIS 218 million. Dolphin, Mr. Elsztain and IDBD filed a
joint response on May 7, 2018, rejecting all of the class action plaintiffs’ arguments. Shortly after this filing, the class
action plaintiffs, together with Mr. Ben Moshe and CAA, filed a motion for an extension of time for the filing of CAA and Ben
Moshe’s response, alleging that they are negotiating a withdrawal of the application filed against Mr. Ben Moshe and CAA.
On May 8, 2018 the Court accepted the motion for extension of time and ordered CAA and Ben Moshe to file their response by July
8, 2018. A preliminary hearing is scheduled for November 11, 2018. In this preliminary stage of the proceedings, external counsel
handling the defense are not able to estimate the risk, but they estimate that it is more likely than not that the class action
will be dismissed.



Distributions
to Shareholders



Amounts
Available for Distribution



At
each annual shareholders’ meeting, our board of directors is required to submit to shareholder approval its proposal on
the allocation of our net income for the preceding year. Pursuant to Brazilian corporate law, the proposal of the board of directors
has to be evaluated by the fiscal council (conselho fiscal), if in operation. Brazilian corporate law defines “net
income” for any fiscal year as the results in a given year after the deduction of accrued losses from prior years, the provisions
for income and social contribution taxes for that year, and any amounts allocated to profit-sharing payments to the employees
and management (provided, however, that such payments will only be disbursed after payment of the mandatory dividend to the company’s
shareholders). All calculations in connection with net income and its allocation to reserves are based on the audited financial
statements for the preceding fiscal year.



Our
bylaws provide that an amount equal to at least 25% of our adjusted net income for any given year should be available for distribution
as a mandatory dividend or interest on shareholders’ equity. Adjusted net income is calculated by adjusting net income as
follows: (i) deducting amounts allocated to legal reserve, statutory reserve, contingency reserve, retained earnings and unrealized
profit reserve, as applicable; (ii) adding amounts reversed from the contingency reserve; and (iii) adding unrealized profit reserve
amounts, upon their realization and if not offset by subsequent losses, if any. Such amount represents the minimum mandatory dividend,
or mandatory dividend. The allocation of amounts to the mentioned reserves cannot be made to the detriment of the payment of the
mandatory dividend. Moreover, the minimum mandatory dividend may be limited to the ‘realized’ portion of net income.
Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution, are
determined on the basis of our financial statements prepared in accordance with Brazilian corporate law. For more information,
see “Item 8—Financial Information— Payment of Dividends and Interest on Shareholders’ Equity” below.



The
distribution of dividends for the year ended June 30, 2018 was approved at our shareholders’ meeting held on October 16,
2018 in the amount of R$41.0 million, or R$0.76 (or US$0.21) per share. The payment of dividends shall be paid to shareholders
on November 6, 2018, for holders of record of our shares as of October 16, 2018.





56







Reserve
Accounts



Brazilian
corporate law provide for two main categories of reserve accounts, which may be used for purposes of dividend payments: income
reserve accounts and capital reserve account.



Income
Reserve Accounts



Pursuant
to Brazilian corporate law, our income reserve accounts are comprised of the legal reserve, the contingency reserve, the fiscal
subsidies reserve, the investment and expansions reserve and the retained earnings reserve.



The
balance of the income reserves, except for the balances of contingency, fiscal subsidies and unrealized profit reserves, may not
exceed the amount of our capital stock. In case of excess, our shareholders shall decide at a shareholders’ meeting whether
the excess amount will be used to pay or increase our capital stock or pay dividends.



Legal
reserve: Under Brazilian corporate law, we are required to maintain a legal reserve to which we must allocate 5% of our net
income for each fiscal year until the aggregate amount of the reserve equals 20% of our capital stock. However, we are not required
to make any allocations to our legal reserve in a year in which the legal reserve, when added to our other capital reserves, exceeds
30% of our capital stock. The amounts allocated to such reserve must be approved by our shareholders in a shareholders’
meeting, and may only be used to increase our capital stock or to offset net losses. As of June 30, 2018, we had R$16.7 million
allocated to legal reserve.



Contingency
reserve: Pursuant to Brazilian corporate law, a percentage of our net income may be allocated to a contingency reserve for
anticipated losses that are deemed probable in future years, if their amount may be estimated. This allocation has to be proposed
by the company’s management and approved at a shareholders’ meeting. The management’s proposal must indicate
the cause of the anticipated loss and justify the need for such allocation. Any amount so allocated must be reversed in the fiscal
year in which a loss that had been anticipated fails to occur as projected or charged off in the event that the anticipated loss
occurs. As of June 30, 2018, we had no contingency reserve.



Fiscal
subsidies reserve: The part of net income corresponding to amounts granted by the government to our company for investment
purposes may be allocated to the fiscal subsidies reserve. Pursuant to Brazilian corporate law, this allocation is only permitted
if proposed by our management and approved at a shareholders’ meeting. Such amounts will not be taken into account for purposes
of the calculation of the mandatory dividend. As of June 30, 2018, we had no fiscal subsidies reserve.



Investment
and expansion reserve: Pursuant to Brazilian corporate law, the amount by which the mandatory dividend exceeds the realized
net income in any given year may be allocated to other earnings reserve or investment and expansion reserve, and the mandatory
dividends may be limited to the realized portion of the net income. Brazilian corporate law defines realized net income as the
amount by which our net income exceeds the sum of our net positive results, if any, from the equity method of accounting; and
the income, gains or profits resulting from transactions that occurred in the relevant fiscal year but that will be received by
us after the end of the next year. Profits recorded as earnings reserve must be added to the next mandatory dividend distributed
after the realization of such profits, if not absorbed by losses in subsequent years. As of June 30, 2018, we had R$137.2 million
allocated to investment and expansion reserve.



Retained
earnings reserve: Pursuant to Brazilian corporate law, we are permitted to allocate part of our net income to discretionary
reserve accounts that may be established in accordance with our bylaws, which must also indicate the purpose, allotment criteria
and maximum amount of the reserve. The allocation of net income to retained earnings reserve accounts may not be made if it affects
the payment of the minimum mandatory dividend. As of June 30, 2018, we had no funds allocated to retained earnings reserves.



Capital
Reserve Account



Pursuant
to Brazilian corporate law, we may maintain capital reserves in which we may record goodwill paid in connection with the subscription
of our shares, mergers, sale of warrants, subscription bonds, participation certificates (which are not applicable to us), debentures,
donations, stock option granted and governmental granting for investments. These reserves may only be used for the following purposes:
(i) to offset losses that exceed the retained earnings and income reserves, (ii) to redeem, repay or purchase shares of our capital
stock, and (iii) to increase our capital stock. The amounts allocated to our capital reserve account are not considered for purposes
of the calculation of mandatory dividends. As of June 30, 2018, we had R$1.9 million allocated to a capital reserve.



Payment
of Dividends and Interest on Shareholders’ Equity



Brazilian
corporate law requires that the bylaws of a Brazilian corporation specify a minimum percentage of the income available for the
annual distribution of dividends, known as mandatory dividend, which must be paid to shareholders as either dividends or interest
on shareholders’ equity. The basis of the mandatory dividend is a percentage of the net income, as adjusted pursuant to
Brazilian corporate law. Under our bylaws, a minimum of 25% of our adjusted net income should be intended for the distribution
and payment to our shareholders as mandatory dividend. However, the payment of mandatory dividends to our shareholders may be
limited to the amount of realized net income in a given year, provided the difference should be recorded as unrealized income
reserve. Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution,
are determined on the basis of our non-consolidated financial statements prepared in accordance with Brazilian corporate law.
The mandatory dividend may also be paid as interest on shareholders’ equity, in which event it is deemed a deductible expense
for purposes of income and social contribution taxes on revenue.



In
addition, our board of directors may advise our shareholders that additional dividends may be distributed from other income or
reserves legally available for distribution. Brazilian corporate law allows, however, a company to suspend such dividend distribution
if its board of directors reports at our annual shareholders’ meeting that the distribution would be inadvisable given the
company’s financial condition. The fiscal council, if in place at the time, should review any suspension of the mandatory
dividend. In addition, our management should submit a report to the CVM setting forth the reasons for the suspension. Net income
not distributed by virtue of a suspension is allocated to a separate reserve and, if not absorbed by subsequent losses, is required
to be distributed as dividends as soon as the financial condition of the company should permit such payment.



Our
board of directors may distribute interim dividends on the basis of monthly, bi-monthly, quarterly or semi-annual financial statements.
Our dividend policy has to comply at all times with the mandatory dividend requirements under Brazilian corporate law.





57







Shareholders
have a three-year period from the date of the payment to claim the dividends or interest on shareholders’ equity with respect
to their common shares, as applicable, after which the aggregate amount of any unclaimed amounts legally reverts to us.



Dividends



The
distribution of dividends in any given fiscal year is proposed by our executive officers (Diretoria) to the board of directors,
which then submits a detailed proposal to shareholders at a shareholders’ meeting. In preparing this proposal, the board
of directors will take into account our business strategy, investment plans, financial condition and the recommendations of the
fiscal council. The proposal for distribution of dividends is then submitted to our annual shareholders’ meeting, in which
a majority of the voting shareholders is necessary to approve it. We may distribute additional dividends if so deemed adequate
by our board of directors in view of our capital structure. Our board of directors may revise or modify our dividend policy at
any time.



We
are required by Brazilian corporate law and our bylaws to hold an annual shareholders’ meeting no later than four months
after the end of each fiscal year, at which time the allocation of the results of operations in any year and the distribution
of an annual dividend are reviewed. The distribution of annual dividends is based on our audited financial statements prepared
for the immediately preceding fiscal year.



Any
holder of record of common shares at the time a dividend is declared is entitled to receive dividends. Under Brazilian corporate
law, dividends are generally required to be paid within 60 days following the date on which the dividend is declared, unless the
shareholders’ resolution established another payment date, which, in any event, must occur before the end of the year in
which the dividend is declared. Our bylaws do not require that dividend payments be adjusted for inflation.



Interest
on Shareholders’ Equity



Since
January 1, 1996, Brazilian companies have been authorized to pay interest on shareholders’ equity to shareholders, and to
treat those payments as deductible expenses for purposes of calculating corporate income tax and, since 1997, the social contribution
tax, as well. The amount of the tax deduction in each year is limited to the greater of (i) 50.0% of our net income (after the
deduction of social contribution tax on net profit, but before taking into account the provision for corporate income tax and
the amounts attributable to shareholders as interest on shareholders’ equity) for the period in respect of which the payment
is made; and (ii) 50.0% of our accumulated profits and income reserves at the beginning of the relevant period. The rate applied
in calculating interest on shareholders’ equity cannot exceed the pro rata daily variation of the TJLP.



Payments
of interest on shareholders’ equity to our shareholders, whether or not residing in Brazil, are subject to Brazilian withholding
tax at the rate of 15%. A tax rate of 25% applies if the shareholder receiving such interest on shareholders’ equity resides
at a Tax Haven Jurisdiction, which is defined under Brazilian tax laws as a country where income tax is not levied, or levied
at a maximum rate lower than 17%, or where the local legislation does not allow access to information related to shareholding
composition of legal entities or to their ownership or to the identity of the effective beneficiary of the income attributed to
non-residents. See “Item 10—Additional Information—Taxation—Brazilian Tax Considerations—Interest
on Shareholders’ Equity.”



Amounts
paid as interest on shareholders’ equity, net of withheld income tax, can be taken into consideration for purposes of distribution
of the mandatory dividend. If a distribution of interest on shareholders’ equity in any given fiscal year is not recorded
as part of the mandatory dividend distribution, we will not withhold the applicable income tax, which will have to be paid by
our shareholders.



Pursuant
to Law No. 9,249, of December 26, 1995, as amended, interest on shareholders’ equity paid or payable to our shareholders
should be computed in our results for the year under financial expenses. For purposes of the presentation of financial statements,
however, these amounts revert to the statement of income charged to accumulated earnings as profit distribution.



We
have never paid interest on shareholders’ equity since the beginning of our operations.



Recent
Dividend Payments



The
distribution of dividends for the year ended June 30, 2018 was approved at our shareholders’ meeting held on October 16,
2018 in the amount of R$41.0 million, or R$0.76 (or US$0.21) per share. The payment of dividends shall be paid to shareholders
on November 6, 2018, for holders of record of our shares as of October 16, 2018.



The
distribution of dividends for the year ended June 30, 2017 was approved at our shareholders’ meeting held on October 2,
2017 in the amount of R$13.0 million, or R$0.27 (or US$0.07) per share. The payment of dividends shall be paid to shareholders
on October 30, 2017, for holders of record of our shares as of October 2, 2017.



The
distribution of dividends for the year ended June 30, 2016 was approved at our shareholders’ meeting held on October 21,
2016 in the amount of R$10.0 million, or R$0.18 (or US$0.06) per share and at our extraordinary shareholders’ meeting held
on November 07, 2016 in the amount of R$22.0 million, or R$0.40 (or US$0.12) per share, totaling the amount of R$32.0 million
or R$0.58 (or US$ 0.18) per share.



The
distribution of dividends for the year ended June 30, 2015 was approved at our shareholders’ meeting held on October 28,
2015 in the amount of R$80.7 million, or R$1.3977 (or US$0.3603) per share.



For
the year ended June 30, 2014, there was no distribution of dividends to our shareholders, as we recorded a loss.



|B. | Significant
Changes
|-- | -------------------



The
Company is not aware of any changes bearing upon its financial condition since the date of the financial statements included in
this Annual Report.





58







ITEM
9—THE OFFER AND LISTING



|A. | Offer
and listing details Price History of our Common Shares and ADRs
|-- | ---------------------------------------------------------------------



Our
common shares began trading on the Novo Mercadomarket segment of the B3 on May 15, 2006 under the symbol AGRO3. The ISIN
for our common shares is BRAGROACNOR7.



The
following table shows the low and high trading prices of our common shares for the five most recent full fiscal years:



|                    |  |  | B3                       |      
|------------------- |  |  | ------------------------ | -----
|Year ended June 30, |  |  | High                     |      
|                    |  |  | (in R$ per common share) |      
|2014                |  |  |                          | 10.44
|2015                |  |  |                          | 11.19
|2016                |  |  |                          | 13.28
|2017                |  |  |                          | 13.03
|2018                |  |  |                          | 14.40










Source:
Bloomberg



The
following table shows the low and high trading prices of our common shares for each calendar quarter since July 1, 2016:



|                       |  |  | B3                       |      
|---------------------- |  |  | ------------------------ | -----
|Quarterly period ended |  |  | High                     |      
|                       |  |  | (in R$ per common share) |      
|September 30, 2016     |  |  |                          | 13.29
|December 31, 2016      |  |  |                          | 11.50
|March 31, 2017         |  |  |                          | 12.88
|June 30, 2017          |  |  |                          | 13.06
|September 30, 2017     |  |  |                          | 13.70
|December 31, 2017      |  |  |                          | 13.48
|March 31, 2018         |  |  |                          | 13.99
|June 30, 2018          |  |  |                          | 14.40
|September 30, 2018     |  |  |                          | 14.95








Source:
Bloomberg



The
following table shows the low and high trading prices of our common shares for each month indicated below:



|               |  |  | B3                       |      
|-------------- |  |  | ------------------------ | -----
|Monthly period |  |  | High                     |      
|               |  |  | (in R$ per common share) |      
|April 2018     |  |  |                          | 13.37
|May 2018       |  |  |                          | 13.67
|June 2018      |  |  |                          | 14.40
|July 2018      |  |  |                          | 14.39
|August 2018    |  |  |                          | 14.95
|September 2018 |  |  |                          | 14.80








Source:
Bloomberg



In
September 2010, we established a Level 1 American Depositary Receipt (ADR) program in the United States, which, as of September
20, 2010, has allowed our ADRs to be traded on the over-the-counter (OTC) market in the United States under the symbol “BRCPY.”



In
November 2012, we established a Level 2 American Depositary Receipt (ADR) program in the United States, which, as of November
8, 2012, has allowed our ADRs to be traded on the New York Stock Exchange (NYSE) under the symbol “LND.”



The
following table shows the low and high trading prices of our ADRs for each fiscal year since our ADRs were listed on the NYSE:



|                    |  |  | NYSE             |     
|------------------- |  |  | ---------------- | ----
|Year ended June 30, |  |  | High             |     
|                    |  |  | (in US$ per ADR) |     
|2015                |  |  |                  | 4.40
|2016                |  |  |                  | 3.60
|2017                |  |  |                  | 4.06
|2018                |  |  |                  | 4.55








|Source: Bloomberg |  |  |  |  |  |  |  |  | 
|----------------- |  |  |  |  |  |  |  |  | 



The
following table shows the low and high trading prices of our ADRs since July 1, 2016:



|                       |  |  | NYSE             |     
|---------------------- |  |  | ---------------- | ----
|Quarterly period ended |  |  | High             |     
|                       |  |  | (in US$ per ADR) |     
|September 30, 2016     |  |  |                  | 4.11
|December 31, 2016      |  |  |                  | 3.66
|March 31, 2017         |  |  |                  | 4.09
|June 30, 2017          |  |  |                  | 4.19
|September 30, 2017     |  |  |                  | 4.30
|December 31, 2017      |  |  |                  | 4.55
|March 31, 2018         |  |  |                  | 4.49
|June 30, 2018          |  |  |                  | 4.10
|September 30, 2018     |  |  |                  | 3.85








Source:
Bloomberg





59







The
following table shows the low and high trading prices of our ADRs for each month indicated below:



|               |  |  | NYSE             |     
|-------------- |  |  | ---------------- | ----
|Monthly period |  |  | High             |     
|               |  |  | (in US$ per ADR) |     
|April 2018     |  |  |                  | 4.10
|May 2018       |  |  |                  | 3.90
|June 2018      |  |  |                  | 3.85
|July 2018      |  |  |                  | 3.85
|August 2018    |  |  |                  | 3.84
|September 2018 |  |  |                  | 3.62








Source:
Bloomberg



As
of June 30, 2018, we had 10,481,281 ADRs outstanding, with no par value. There are no restrictions on ownership of our ADRs by
individuals or legal entities domiciled outside Brazil.



Investments
in our Common Shares by Non-residents of Brazil



Investors
residing outside Brazil are authorized to purchase equity instruments, including our common shares, on the B3, provided that they
comply with the registration requirements set forth in Resolution No. 4,373 and CVM Instruction No. 325.



Except
for certain limited exceptions, Resolution No. 4,373 sets forth that investors are permitted to carry out any type of transaction
in the Brazilian financial capital market involving a security traded on a Brazilian stock, futures or organized OTC market. Investments
and remittances outside Brazil of gains, dividends, profits or other payments derived from our common shares are made by means
of the foreign exchange market.



In order to become a Resolution No. 4,373 investor, an investor residing outside Brazil must:



| | ● | appoint
                                         a representative in Brazil with powers to take actions relating to the investment;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | ● | obtain
                                         a taxpayer identification number from the Brazilian tax authorities;
| | - | --------------------------------------------------------------------------------------------------------------------



| | ● | appoint
                                         an authorized custodian in Brazil for the investments, which must be a financial institution
                                         duly authorized by the Central Bank and CVM; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | by
                                         means of its representative, register himself as a foreign investor at CVM and the investment
                                         at the Central Bank.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Securities
and other financial assets held by foreign investors pursuant to Resolution No. 4,373 must be registered or maintained in deposit
accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading by foreign
investors are as a general rule restricted to transactions involving securities listed on the Brazilian stock exchanges or traded
in organized OTC markets licensed by the CVM.



Foreign
direct investors under Law No. 4,131, of September 3, 1962, as amended, or Law No. 4,131, may sell their shares in both private
and open market transactions, but these investors are currently subject to less favorable tax treatment on gains. Particularly
in this regard, please refer to “Item 10—Additional Information—Taxation—Brazilian Tax Considerations—Taxation
of Gains.”



A
foreign direct investor under Law No. 4,131 must:



| | ● | register
                                         himself as a foreign direct investor at the Central Bank;
| | - | -----------------------------------------------------------------------------------------------------------



| | ● | obtain
                                         a taxpayer identification number from the Brazilian tax authorities; and
| | - | ------------------------------------------------------------------------------------------------------------------------



| | ● | appoint
                                         a tax representative in Brazil; and appoint a representative in Brazil for service of
                                         process in respect of suits based on the Brazilian corporate law.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|B. | Plan
of Distribution
|-- | --------------------



Not
applicable.



|C. | Markets
|-- | -------



Our
common shares are traded on the Novo Mercadolisting segment of B3 under the symbol “AGRO3.” Our ADRs are traded
on New York Stock Exchange (NYSE) under the symbol “LND.”





60







Trading
on the B3



B3
concentrates all trading activities of shares and commodities in Brazil. Trading on the exchange is conducted by authorized members.
Trading sessions take place every business day, from 10:00 a.m. to 5:00 p.m. (local time) on an electronic trading system called
Megabolsa. Trading is also conducted between 5:30 p.m. and 6:00 p.m. (local time) in an after-market system connected to both
traditional broker dealers and brokerage firms operating on the Internet. This after-market trading is subject to regulatory limits
on price volatility of securities traded by investors operating on the Internet.



In
order to maintain control over the fluctuation of the B3 index, the B3 has adopted a “circuit breaker” system pursuant
to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the B3 index falls below 10% or 15%,
respectively, in relation to the closing index levels of the previous trading session. In addition, in case the B3 index falls
below the 20% mark, the B3 may suspend trading sessions for a period of time to be established at its discretion at the time said
lower mark is reached.



When
investors trade shares on the B3, the trade is settled in three business days after the trade date, without adjustments to the
purchase price. The seller is ordinarily required to deliver the shares to the exchange on the third business day following the
trade date. Delivery of and payment for shares are made through the facilities of an independent clearing house, the Central Depository
B3, which handles the multilateral central counterparty settlement of both financial obligations and transactions involving securities.
According to the regulations of the B3, financial settlement is carried out through the system of transfer of funds of the Central
Bank and the transactions involving the sale and purchase of shares are settled through the B3 custody system. All deliveries
against final payment are irrevocable.



The
Novo Mercadosegment



The
Novo Mercadois a stock market segment of the B3 intended for companies meeting certain requirements and agreeing to adhere
to heightened corporate governance rules. The principal Novo Mercadorules and requirements are summarized as follows:



| | ● | capital
                                         stock should be exclusively composed of common shares, and the issuance or maintenance
                                         of so called founder’s shares is prohibited;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | public
                                         float of shares should represent at least 25% of the capital stock;
| | - | -------------------------------------------------------------------------------------------------------------------



| | ● | in
                                         the event of a transfer of control, even if through a series of successive sales, the
                                         transfer should be subject to the minority shareholders being granted the same conditions
                                         offered to any controlling shareholders, including the same price, through a tender offer
                                         for the acquisition of shares (tag-along rights);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         board of directors should be composed of at least five members, of which at least 20%
                                         should be independent directors elected during the shareholders’ meeting for a
                                         term of up to two years, with reelection permitted;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | new
                                         members of the board of directors and the executive officers are required to sign an
                                         agreement, the Management’s Consent Statement (Termo de Anuência dos Administradores),
                                         that makes their taking of office subject to the execution of this agreement, through
                                         which the new directors and executive officers of the company take personal responsibility
                                         to act in accordance with the listing agreement with the Novo Mercado, the rules
                                         of the Market Arbitration Chamber (Câmara de Arbitragem do Mercado) and
                                         the Novo Mercado regulation;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         statement of cash flow (both the company’s and consolidated) must be included in
                                         the quarterly financial reports and annual financial statements;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         schedule of corporate events should be disclosed annually to the shareholders, by the
                                         end of the month of January; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | delisting
                                         from the Novo Mercado, as well as the decision to cancel the registration as a
                                         public company, should be subject to any controlling shareholders’ making a public
                                         tender offer for the acquisition of all outstanding shares of the company, at a minimum
                                         price of their economic value determined in a valuation report prepared by a specialized
                                         institution or company with recognized experience and independent from persons with the
                                         power to make decisions within a company, such as directors or any controlling shareholders,
                                         in addition to meeting the requirements set forth in Article 4 of the Brazilian corporate
                                         law; and the issuer, any controlling shareholders, management and members of the fiscal
                                         council should submit to the Market Arbitration Chamber under the terms of its regulation,
                                         any dispute or controversies that may arise among themselves, relating to and resulting
                                         from, specifically, the application, validity, effectiveness, interpretation, violation
                                         and effects of the arrangements contained in the Brazilian corporate law, our bylaws,
                                         the rules and regulations of the CMN, the Central Bank, and the CVM, as well as additional
                                         rules and regulations applicable to the capital markets, Novo Mercadoregulation,
                                         the rules of the Market Arbitration Chamber and the listing agreement with the Novo
                                         Mercado.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Brazilian securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United
States. The B3, which is the principal Brazilian stock exchange, had a market capitalization of R$2.3 trillion (US$0.7 trillion),
as of December 31, 2017, and an average daily trading volume of R$9.7 billion (US$2.9 billion) in 2017. In comparison, the aggregate
market capitalization of the companies (including U.S. and non-U.S. companies) listed on the NYSE was US$27.8 trillion as of December
31, 2017, and the NYSE recorded an average daily trading volume of US$12.5 billion in 2017. There is also significantly greater
concentration in the Brazilian securities markets. The ten largest companies in terms of market capitalization represented approximately
71% of the aggregate market capitalization of the B3 as of December 31, 2017. The ten most widely traded stocks in terms of trading
volume accounted for approximately 39% of all shares traded on the B3 in 2017. These market characteristics may substantially
limit the ability of holders of our ADSs to sell the common shares underlying our ADSs at a price and at a time when they wish
to do so and, as a result, could negatively impact the market price of our ADSs themselves.



Regulation
of Brazilian securities markets



The
Brazilian securities market is governed by the CVM, as provided for by Law No. 6,385, of December 7, 1976, as amended, or the
Brazilian Securities Exchange Law, and Brazilian corporate law. The CVM is responsible for granting licenses to brokerage firms
to govern their incorporation and operation, and regulating foreign investment and exchange transactions, as provided for by the
Brazilian Securities Exchange Law and Law No. 4,595, of December 31, 1964, as amended. These laws and regulations provide for,
among other things, disclosure requirements, criminal sanctions for insider trading and price manipulation, protection of minority
shareholders, the procedures for licensing and supervising brokerage firms and the governance of Brazilian stock exchanges.





61







Under
Brazilian corporate law, a company is required to be publicly held, or companhia aberta,before listing its shares. All
publicly held companies are registered with the CVM and are subject to reporting requirements in order to periodically disclose
information and material facts. A company registered with the CVM may trade its securities either on the Brazilian exchange markets,
including the B3, or in the Brazilian OTC market. Shares of companies listed on B3 may not simultaneously trade on the Brazilian
OTC market. The OTC market consists of direct trades between persons in which a financial institution registered with the CVM
serves as an intermediary.



No
special application, other than registration with the CVM (or, in case of organized OTC markets, registration with the applicable
one), is necessary for securities of a public company to be traded in this market. To be listed on the B3, a company must apply
for registration at the B3 and the CVM.



The
trading of securities on B3 may be suspended at the request of a company in anticipation of a material announcement. Trading may
also be suspended upon the initiative of the B3 or the CVM based on or due to a belief that a company has provided inadequate
information regarding a significant event or has provided inadequate responses to inquiries raised by the CVM or the B3, among
other reasons.



|D. | Selling
                                         Shareholders
|-- | -------------------------------------------------------------



Not
applicable.



|E. | Dilution
|-- | --------



Not
applicable.



|F. | Expenses
of the Issue
|-- | ---------------------



Not
applicable.



ITEM
10—ADDITIONAL INFORMATION



|A. | Share
Capital
|-- | -------------



Not
applicable.



|B. | Memorandum
and Articles of Association
|-- | --------------------------------------



Organization,
Register and Entry Number



We
are a publicly-listed corporation, or sociedade por ações de capital aberto, organized in accordance with
Brazilian law. Our registered office is located at Avenida Faria Lima, 1309, 5th floor, in the city of São Paulo,
State of São Paulo, Brazil. We are registered with the Commercial Registry of the state of São Paulo (Junta Comercial
do Estado de São Paulo) under NIRE No. 35.300.326.237, and with the CVM under No. 20036.



On
April 10, 2006, we and our principal shareholders entered into the Novo MercadoParticipation Agreement (Contrato de
Participação no Novo Mercado) with B3. Also, as required under the Novo Mercadolisting regulations,
all our directors, officers and members of our fiscal council have undertaken to abide by the rules set forth in the Novo MercadoParticipation Agreement and by the Novo Mercadolisting segment rules and regulations applicable to each of them.



Our
common shares are traded on the Novo Mercadolisting segment of B3 under the symbol “AGRO3.” In September 2010,
we established a Level 1 American Depositary Receipt (ADR) program in the United States, which, as of September 20, 2010, has
allowed our ADRs to be traded on the over-the-counter (OTC) market in the United States under the symbol “BRCPY.”
In November 2012, we established a Level 2 American Depositary Receipt (ADR) program in the United States, which, as of November
8, 2012, has allowed our ADRs to be traded on New York Stock Exchange (NYSE) under the symbol “LND.”



Capital
Stock



During
the fiscal year ended June 30, 2016, we acquired 3,557,900 common shares under the share buyback program, which accounted for
10.55% of our outstanding shares (excluding the shares held by the controlling shareholder).



During
the year ended June 30, 2017, we acquired a total of 1,345,400 common shares under our share buyback program, which accounted
for 3.99% of our shares outstanding (excluding the shares held by the controlling shareholder).



During
the year ended June 30, 2018, we acquired a total of 50,300 common shares under our share buyback program, which accounted for
0.15% of our shares outstanding (excluding the shares held by the controlling shareholder).



As
of June 30, 2018, our fully paid capital stock was R$584.2 million, divided into 56,888,916 registered book-entry common shares,
without par value. Our bylaws authorize our board of directors to increase our capital stock up to R$3.0 billion without shareholder
approval. Any capital increase in excess of such amount must be approved at a shareholders’ meeting.



Corporate
Purpose



Article
3 of our bylaws define our corporate purposes as including: (i) the development of agricultural and forestry activities and the
rendering of services directly or indirectly related thereto; (ii) the purchase, sale and/or lease of real estate properties in
agricultural and/or urban areas; (iii) the import and export of agricultural products, supplies and inputs; (iv) the brokering
of real estate transactions of any kind; (v) the holding equity investments in other companies and business ventures of any kind
related to our corporate purpose, either in Brazil or abroad; and (vi) the management of our own or third-party assets.





62







Share
Register



Banco
Bradesco S.A. holds the book-entry register of our common shares. Share transfers are made upon written instructions of the transferor
or court order, by charging the transferor’s share account and crediting the transferee’s account by the appropriate
amount.



Rights
of Common Shares



Our
capital stock consists exclusively of common shares. Each of our common shares entitles its holder to one vote at our shareholders’
meetings, and to receive pro rata dividends or other distributions. See “Item 8—Financial Information—Dividends
and Dividend Policy” for a description of distribution rights in connection with our common shares. Holders of our common
shares also have the right, subject to certain exceptions provided for in Brazilian corporate law, but not the obligation, to
subscribe to our future capital increases. Our shareholders are also entitled to share ratably our remaining assets in case we
are liquidated, after payment of all our liabilities.



Brazilian
corporate law awards our shareholders the following rights, which cannot be circumvented by bylaws amendments or majority resolutions
at shareholders’ meetings: (i) the right to participate in the distribution of profits; (ii) the right to participate equally
and ratably in any remaining residual assets in the event of liquidation of the company; (iii) preemptive rights in the event
of issuance of shares, convertible debentures or subscription warrants, except in certain specific circumstances, as set forth
in Brazilian corporate law (see “Item 10—Additional Information— Preemptive rights”); (iv) the right to
hold our management accountable, in accordance with the provisions of Brazilian corporate law; and (v) the right to withdraw in
the cases specified in Brazilian corporate law, including in the events of merger or consolidation, such as those described in
“Item 10— Additional Information—Withdrawal and Redemption Rights—Withdrawal Rights.”



Furthermore,
pursuant to our bylaws and in accordance with CVM and Novo Mercadorules and regulations, the direct or indirect transfer
of our control, either through one or a series of related transactions, is contingent upon the acquirer making a tender offer
to acquire all of our shares.



As
long as we are listed on the Novo Mercado, we may not issue preferred shares or participation certificates, and should
we decide to delist from the Novo Mercado, we must carry out a tender offer to acquire all shares traded on stock markets.
For further information, see “Item 10—Additional Information—Delisting from the Novo Mercado” below.



Warrants



On
March 15, 2006, our board of directors approved the issuance of warrants to our founding shareholders proportionally to their
subscription of shares during our capital increases. See “Item 10—Additional Information—Description of Outstanding
Warrants.”



Shareholders’
Meetings



Pursuant
to Brazilian corporate law, our shareholders have the power to take any action and approve any resolutions related to our activities
at shareholders’ meetings, provided that such meetings have been convened pursuant to the terms and procedures described
in Brazilian corporate law and in our bylaws. It is the exclusive prerogative of the annual shareholders’ meeting (assembleia
geral ordinária) to review management’s account of corporate activities; approve our financial statements; and
determine the allocation of our net income and the payment of dividends with respect to the previous fiscal year. Members of our
board of directors and fiscal council are also usually appointed at the annual shareholders’ meeting, although such appointments
may also take place at special shareholders’ meetings.



Our
shareholders may also convene special shareholders’ meetings, which may be held concurrently with the annual shareholders’
meeting or at any time of the year.



The
following actions, among others, may be taken exclusively at shareholders’ meetings: (i) approval of amendments to the bylaws;
(ii) approval of management accounts and financial statements; (iii) appointment and dismissal of members of our board of directors
and fiscal council; (iv) the establishment of the aggregate compensation of the board of directors, executive officers and fiscal
council; (v) approval of the company’s dissolution, motion for bankruptcy or judicial or out-of-court reorganization proceedings,
liquidation, merger, spin-off, or consolidation with any other company, and any share mergers; (vi) approval of pro ratashare
distributions to current shareholders, stock splits and reserve stock splits; (vii) approval of stock option plans and similar
arrangements for our management and employees, and for the managers and employees of our direct or indirect subsidiaries; (viii)
approval of management’s proposals regarding allocation of net income and distribution of dividends; (ix) approval of capital
increase over the limit authorized in our bylaws; (x) appointment of liquidators and members of the fiscal council during liquidation
proceedings; (xi) approval of the cancellation of our registration as a publicly-held company at CVM; (xii) approval of our delisting
from the Novo Mercadolisting segment; (xiii) approval of engagement of an appraiser to evaluate the value of our shares
in case of cancellation of our registration as a public company at CVM or our delisting from the Novo Mercadolisting segment;
and (xiv) the passing of resolutions on any matter submitted to the shareholders’ meeting by our board of directors.



Shareholders’
meetings are not allowed to circumvent certain specific shareholder rights enumerated in Brazilian corporate law. See “Item
10— Additional Information—Rights of Common Shares,” above.



Quorum



As
a general rule, Brazilian corporate law provides the need of shareholders representing at least 25% of our voting capital stock
in order for a company to able to convene a shareholders’ meeting on first call, except if the meeting is called to amending
our bylaws, in which case two thirds of our voting capital stock shall be required on first call. In either case, if the applicable
quorum is not reached on first call, any percentage will suffice to convene the meeting on second call.



Approval
of resolutions at shareholders’ meetings generally requires the affirmative vote of shareholders representing at least the
majority of common shares attending the meeting, either in person or represented by a proxy. Non-voting shares are disregarded
for purposes of calculating the majority.





63







The Novo
Mercadolisting rules require, for the approval of certain issues, such as to retain a specialized firm to prepare a
valuation report with respect to the value of our common shares in the event of delisting from the Mercado Novo listing
segment or cancelling our registration as a publicly-held company, the affirmative vote of shareholders representing at
least the majority of our issued and outstanding common shares (the “Outstanding Shares”) present at a
shareholders’ meeting. In such events, the shareholders’ meeting must count on the presence of shareholders
representing at least 20% of our Outstanding Shares on first call, or on the presence of any percentage of our Outstanding
Shares on second call, with blank votes not taken into account and with one vote entitled to each share. For these purposes,
Outstanding Shares within the meaning set forth in the Novo MercadoParticipation Agreement and Novo Mercadolisting
segment regulations means all our issued and outstanding shares, provide, however, with the exclusion of, (i) the shares held
by any controlling shareholders or by affiliates of such controlling shareholders, (ii) the shares held by our managers, and
(iii) treasury shares. See “Item 10—Additional Information—Delisting from the Novo Mercado”
for additional information on this matter.



Notice
of Shareholders’ Meetings



Brazilian
corporate law requires that previous notice of any shareholders’ meeting be published on three different dates on federal
or state official gazette and another newspaper of high circulation in the state of the corporate offices. As a general rule,
our company publishes meetings notices on the Official Gazette of the state of São Paulo (Diário Oficial do Estado
de São Paulo) and the newspaper O Estado de São Paulo. The first notice must be published no later than 15 days
prior to the date of when meeting on first call is schedule to take place, and no later than eight days in advance to the date
of the shareholders’ meeting on second call. In certain circumstances, the CVM may require that the first notice for the
shareholders’ meeting to be published no later than 30 days prior to the shareholders’ meeting. Nevertheless, CVM
may also require, upon shareholder request, up to 15 additional days between such prior notice and any special shareholders’
meeting, in order to enable such shareholder to having enough time to analyze the matters to be discussed at the meeting. In addition,
our bylaws require that a shareholders’ meeting to be convened to decide on the cancellation of our registration as a public
company with the CVM or our delisting from the Novo Mercadolisting segment must be called at least 30 days prior to the
shareholders’ meeting. The notice on the shareholders’ meeting must contain the agenda, date and venue of the meeting,
and (if applicable) the nature of the proposed bylaws amendments.



Venue



Our
shareholders’ meetings take place at our head office in the city of São Paulo, in the state of São Paulo.
Brazilian corporate law allows our shareholders to hold meetings in another location in the event of force majeure, provided that
the meetings are held in the city of São Paulo and the relevant notice includes a clear indication of the place where the
meeting will occur.



Who
May Call our Shareholders’ Meetings



As
a general rule, Shareholders’ meetings are called by our board of directors, although they may also be called by the following:
(i) any shareholder, if our directors fail to call a shareholders’ meeting within 60 days after the date they were required
to do so under applicable laws and our bylaws; (ii) holders of at least 5% of our capital stock, if our directors fail to call
a meeting within eight days following receipt of a justified request to call the meeting by those shareholders, indicating the
proposed agenda; (iii) holders of at least 5% of our capital stock if our directors fail to call a meeting within eight days after
receipt of a request to call the meeting to establish the fiscal council; and (iv) our fiscal council (if already established),
if our board of directors fails to call an annual shareholders’ meeting within one calendar month after the date it was
required to do so under applicable laws. The fiscal council (if already established) may also call a special shareholders’
meeting if it believes that there are important or urgent matters to be addressed.



Conditions
of Admission to a Shareholders’ Meeting



In
order to attend and vote at shareholders’ meetings, shareholders must identify themselves and, 72 hours before the meeting,
provide evidence of proper title to the voting shares, issued by the financial institution responsible for the bookkeeping of
our shares, no earlier than five days before expiration off the 72-hour deadline mentioned herein. A shareholder may be represented
at a shareholders’ meeting by a proxy, provided that such proxy has been appointed less than one year before the meeting.
Only attorneys, financial institutions, other shareholders, and our executive officers and directors can act as proxies for our
shareholders. An investment fund must be represented by its officers.



Management
and Fiscal Council



Pursuant
to our bylaws, and in accordance with Brazilian corporate law and the Novo Mercadolisting rules, we are governed by our
board of directors (conselho de administração) and executive officers (diretoria).



Our
bylaws require that our board of directors comprise of at least of five and not less than to nine directors. Currently, our board
of directors has nine members, of which four are independent directors under the Novo Mercadolisting rules, unrelated
to our principal shareholders or to us. Our board members are elected by our shareholders at the annual shareholders’ meeting,
for a period of two consecutive years, reelection being permitted. We have also recently suggested the inclusion of two alternate
members to comprise the board of directors in the event any of the sitting members resign.



According
to our bylaws, our board of directors may establish one or more technical or advisory committees for specific purpose and with
specific duties, whose members may or may not include our officers or executive officers. Our board of directors must establish
the rules applicable to those committees, including rules for their composition, mandates, compensation and operation. Such committees
are advisory committees and not deliberative by nature.



Brazilian
corporate law permits cumulative voting upon the request of holders of at least 10% of our voting capital. Each share is granted
as many votes as the number of board seats, and each shareholder has the option to cast his or her votes for one or more candidates.
However, pursuant to CVM Instruction No. 282, of June 26, 1998, the threshold to trigger multiple voting rights in publicly held
corporations may be reduced in proportion to the amount of capital stock, ranging from 5% to 10%. Shareholders representing 5%
of our voting capital may request the adoption of cumulative voting rights.



Under
applicable law, if there is no request for cumulative voting, the shareholders’ meeting will vote based on a previously
registered list, assuring shareholders that individually or collectively hold at least 15% of our common shares, in a separate
vote, the right to elect one director and his or her alternate. Notwithstanding the foregoing, at a meeting held on November 4,
2006, CVM Board has decided to maintain the interpretation of section 141, fifth paragraph, of Brazilian Federal Law No. 6,404/76
expressed at the meeting held on November 8, 2005 (CVM Case RJ2005/5664), which, in those cases whereupon the Company has only
issued shares with voting rights, the majority of holders holding at least 10% of the total voting shares will have the right
to elect and remove a member and his alternate from the Board of Directors, by a separate vote at the general meeting, excluding
the controlling shareholder.





64







If
cumulative voting is requested, each shareholder may vote for one or more board members. Each common share will entitle its holder
to one vote in the relevant shareholders’ meeting and each shareholder may cast votes for members as they wish.



Our
bylaws require that we have two to six executive officers. At the date of this annual report, we have two executive officers.
They are elected by our directors for a period of one year, with the possibility of reelection. Pursuant to Brazilian corporate
law, executive officers must be residents of Brazil, but do not need to be shareholders.



Pursuant
to our bylaws, our fiscal council is permanent, has the powers and attributions conferred upon it by law and is also incumbent
upon exercising the role of Audit Committee, in accordance with the Sarbanes Oxley Act and the rules issued by the SEC. The fiscal
council members are elected at the annual shareholders’ meeting with a term of office that extends through the following
annual shareholders’ meeting. Our fiscal council shall be comprised by three to five effective sitting members and their
alternates, who may or may not be shareholders. All members of our fiscal council are also required to sign an agreement to comply
with the Novo Mercadorules prior to assuming their roles. The current members of our fiscal council will exercise their
duties until the annual shareholders’ meeting to be held in 2019 to approve the management accounts and financial statements
for the fiscal year ended June 30, 2018.



Transactions
in Which Directors Have a Conflict of Interest



Pursuant
to Brazilian corporate law, our directors and executive officers may not:



| | ● | give
                                         any gifts at our expense, except for such reasonable gifts as are for the benefit of
                                         our employees or of the community in which we participate, upon approval by our board
                                         of directors;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | receive,
                                         by virtue of his or her position, any direct or indirect personal benefit from third
                                         parties without authorization in our bylaws or by our shareholders at a shareholders’
                                         meeting;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | borrow
                                         money or property from us or use our property, services or credit for his or her own
                                         benefit or for the benefit of a company or third party in which he or she has an interest,
                                         without the prior approval of our shareholders at a shareholders’ meeting or of
                                         our board of directors;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | take
                                         part in a corporate transaction in which he or she has an interest that conflicts with
                                         our interests or in the deliberations undertaken by our directors on the matter;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | take
                                         advantage of any commercial opportunity for his or her own benefit or for the benefit
                                         of a third party at the expense of the company when he or she was informed about such
                                         opportunity by virtue of his or her position as a director;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | fail
                                         to disclose a business opportunity in our interests with a view to exploiting the opportunity
                                         for personal gain, or for the benefit of a third party; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | acquire,
                                         in order to resell for profit, a good or right that is essential to our business operations,
                                         or that we intend to acquire for ourselves.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
compensation of our directors is determined by our shareholders at the annual shareholders’ meeting that approves the previous
fiscal year’s financial statements.



Allocation
of Net Income and Dividend Distributions



Before
each annual shareholders’ meeting, our directors and executive officers are required to recommend how to allocate our net
income, from the preceding financial year (if any). This allocation is subject to the approval of our shareholders. Brazilian
corporate law defines “net income” for any particular financial year as net income after income and social contribution
taxes for that financial year, net of any accumulated losses from prior financial years and any amounts allocated to employees’
and management’s participation in our net income in such financial year.



According
to our bylaws and Brazilian corporate law, net income for any given financial year will be allocated as follows: (i) 5% for the
formation of a legal reserve according to Brazilian corporate law, which is subject to a maximum limit of 20% of our capital stock
(in addition, if for any given financial year, the total amount of the legal reserve plus any amounts of capital reserves exceed
30% of our capital stock, additional contributions to the legal reserve will not be mandatory); (ii) payment of mandatory dividends,
which cannot be less than 25% of our adjusted net income. After payment of mandatory dividends, shareholders may decide to allocate
outstanding net income to form a statutory expansion and investment reserve in accordance with the additional requirements provided
for in our bylaws; and (iii) the remaining portion of the adjusted net income may be allocated for investment, based on the budget
approved by our general shareholders’ meeting. However, the remaining balance of the income reserves, excluding reserves
for unrealized profits and contingencies, must not exceed the value of our capital stock. If this limit is reached, a general
shareholders’ meeting will be held to determine whether such excess amount shall be allocated as a capital increase or a
distribution of dividends.



The
general shareholders’ meeting may grant to our directors and executive officers a participation in the distribution of our
profits, after deducting accumulated losses and provisions for income and social contribution taxes, in accordance with applicable
law.



Withdrawal
Rights



According
to Brazilian corporate law, shareholders are entitled to withdrawal rights if they dissent from the approval of the
following actions at any shareholders’ meeting: (i) our spin-off (pursuant to the conditions described below); (ii)
reduction in our mandatory dividends; (iii) change of our corporate form or purpose; (iv) our merger into, or consolidation
with, another company (as described below); and (v) our participation in a corporate group, as defined in Brazilian corporate
law, except in the event our shares are widely held and liquid, as described below; or (vi) our acquisition of the control of
any company, if the acquisition price exceeds the limits established by Brazilian corporate law, except in the event our
shares are widely held and liquid, as described below.





65







Our
spin-off will only trigger withdrawal rights if it results in one of the following: (i) a change in our corporate purpose, unless
the spun-off assets and liabilities are transferred to an entity whose principal business purpose is consistent with our corporate
purpose; (ii) a reduction of the minimum mandatory dividend to be paid to shareholders; or (iii) our participation in a corporate
group (as defined in Brazilian corporate law).



In
cases where we: (i) merge into, or consolidate with, another company; (ii) become part of a corporate group (as defined in Brazilian
corporate law); (iii) acquire all shares of a company in order to make such company our wholly-owned subsidiary, or our shareholders
sell all of our shares to another company in order to make us a wholly-owned subsidiary of such company, pursuant to Article 252
of Brazilian corporate law; or (iv) acquire control of any company at an acquisition price that exceeds the limits established
under Article 256, paragraph 2 of Brazilian corporate law, our shareholders will not be entitled to withdrawal rights, if our
common shares are (a) part of the Bovespa Index or another stock exchange index, as defined by the CVM; and (b) widely held, such
that any controlling shareholders and their affiliates jointly hold less than 50% of the type or series of shares being withdrawn.



The
right to withdraw expires 30 days after the publication of the minutes of the relevant shareholders’ meeting. We are entitled
to reconsider any action giving rise to withdrawal rights for 10 days after the expiration of the aforementioned period if we
determine that the redemption of the shares of dissenting shareholders would jeopardize our financial situation.



Article
45 of Brazilian corporate law describes the amounts to be paid to shareholders who exercise their withdrawal rights. As a general
rule, the withdrawing shareholder will receive the value of the shares, based on the most recent audited balance sheet approved
by our shareholders, or, if lower, the economic value of the shares, based on an evaluation report prepared in accordance with
Brazilian corporate law. If the resolution giving rise to withdrawal rights is passed more than 60 days after the date of our
most recent balance sheet, dissenting shareholders may request that the shares be valued in accordance with a new balance sheet
dated no more than 60 days prior to the date of the resolution. In such case, we are obligated to pay 80% of the share value according
to the most recent balance sheet approved by our shareholders, and the balance within 120 days following the date of the resolution
of the shareholders’ meeting that gave rise to the withdrawal rights.



Liquidation



We
may be liquidated in accordance with the provisions of Brazilian law. In the event of our extrajudicial liquidation, a shareholders’
meeting will determine the manner of our liquidation, appoint our liquidator and our fiscal council that will function during
the liquidation period.



In
the event of our liquidation, the assets available for distribution to our shareholders would be distributed to our shareholders
in an amount equal to their pro rata share of our legal capital. If the assets to be so distributed are insufficient to fully
compensate our all of our shareholders for their legal capital, each of our shareholders would receive a pro rata amount (based
on their pro rata share of our legal capital) of any assets available for distribution.



Redemption



According
to Brazilian corporate law, we may redeem our shares pursuant to a resolution adopted at an extraordinary shareholders’
meeting by shareholders representing at least 50% of our capital stock. The redemption may be paid with our retained earnings,
revenue reserves or capital reserves.



Preemptive
Rights



Except
as described below, our shareholders have a general preemptive right to participate in any issue of new shares, in proportion
to its holding at such time. However, the conversion of debentures into shares, the granting of options to purchase or subscribe
for shares and the issue of shares as a result of the exercise of such options, are not subject to preemptive rights. Our shareholders
are also entitled to preemptive rights in any issue of convertible debentures or offerings of shares or warranties issued by us.
Shareholders have a period of at least 30 days after the publication of notice of the issue of shares, convertible debentures
and warrants to exercise their preemptive rights. In addition, such preemptive rights may be transferred or disposed of for value.
Under the terms of Article 172 of Brazilian corporate law and our bylaws, our board of directors may exclude preemptive rights
or reduce the exercise period with respect to the issue of new shares, debentures convertible into shares and warrants up to the
limit of our authorized share capital, if the distribution of those securities is conducted in a stock exchange, or through a
public offering, an exchange offer for shares or tender offer the purpose of which is to acquire control of another company. Please
refer to “Item 3—Key Information—Risk Factors—Risks Relating to the Offering and Our Common Shares—A
holder of our common shares not residing in Brazil might be unable to exercise preemptive rights with respect to the common shares”
for additional information on this matter.



Insider
Trading Regulations



We
comply with the restrictions on insider trading set forth in CVM Instruction No. 358, of January 3, 2002, as amended. The following
paragraphs contain a brief summary of some of such restrictions.



An
issuer, any controlling shareholders, directors, officers and other members of management are prohibited from trading in any securities
issued by our company or derivatives related to such securities, if (i) they are in possession of material information regarding
our business, and such information has not been publicly disclosed; (ii) a transaction is pending for the acquisition or sale
of shares of our capital stock, by our company, subsidiaries or affiliates, or an option or mandate has been granted in connection
with any of such transactions; or (iii) our company intends to participate in a merger, consolidation or corporate reorganization,
or to spin-off assets or change into a different form of legal entity; and (iv) such trading activity would take place in the
15-day period prior to the filing of our quarterly financial statements (ITR) or annual financial statements (DFP) with the CVM.



Individuals
who held management positions at the company and gained access to material information originating from developments occurred
before their departure from the company are also prohibited from engaging in such trading activities, from the date of their departure
from the company until (i) six months after their departure; or (ii) public disclosure of the material information; provided that
trading will remain prohibited as long as it may interfere with our business or adversely affect our financial condition or that
of our shareholders.



Acquisition
of Treasury Stock



An
issuer cannot acquire shares of its own capital stock, to hold as treasury stock or for cancellation purposes, if this acquisition
would: (i) reduce the issuer’s capital stock; (ii) require the use of funds in excess of the issuer’s profits or available
reserves, as described in its most recent balance sheet; (iii) manipulate the stock price, or use of any unfair trading practice;
or (iv) acquire shares that had not been fully paid by the respective holder, or that were owned by any controlling shareholders.
Furthermore, an issuer may not acquire shares of its own capital stock if a tender offer for its shares is pending.





66







The
amount of shares of our capital stock held by our company, or maintained by our affiliates and subsidiaries in treasury cannot
exceed 10% of the total outstanding shares of our capital stock.



We
may only purchase shares of our own capital stock at a stock exchange. Private purchases are only permitted if previously approved
by the CVM, or if we have cancelled our registration as a public company with the CVM. We can purchase and sell put and call options
on our shares without restrictions at any time.



Restrictions
on Activities Inconsistent with our Corporate Purpose



Any
transactions in which we participate that are inconsistent with our corporate purpose are not enforceable against our company,
pursuant to Brazilian corporate law, including any forms of collateral or guarantees unrelated to our corporate purpose or in
violation of our bylaws.



Disclosure
of Trading of our Shares by an Issuer, any Controlling Shareholders, Directors, Officers or Members of the Fiscal Council



An
issuer’s directors and officers and members of its fiscal council, when active, as well as members of any other
technical or advisory committee, are required to disclose to its investor relations officer, who will disclose to the CVM and
B3, the number and type of securities issued by the issuer, its publicly-held subsidiaries or controlled companies, including
derivatives (in case of any controlling shareholders) held by them or by persons related to them, as well as any alteration
in their respective interests within 10 days as from the end of the month in which trading takes place.



In
addition, the Novo Mercadolisting rules require any controlling shareholders to provide the same information in relation
to securities issued by the issuer, including derivatives, and to disclose their plans for future trading. Information on trading
of an issuer’s securities should include:



| | ● | name
                                         and identification of the acquirer;
| | - | ---------------------------------------------------------------------------------



| | ● | number,
                                         price, kind and/or class, in the event of traded shares, or characteristic, in the event
                                         of other securities; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | form
                                         of acquisition (private transaction, trading on stock exchange, etc.).
| | - | --------------------------------------------------------------------------------------------------------------------



Pursuant
to CVM Instruction No. 358, if an issuer’s controlling shareholders and/or any person or company, whether individually or
together with a group of persons or entities sharing similar interests, should directly or indirectly increase their interest
in an issuer’s capital stock by at least 5% percent, such persons or entities must disclose to us the following information:



| | ● | the
                                         name and identification of the person providing the information;
| | - | -------------------------------------------------------------------------------------------------------------



| | ● | the
                                         number, price, kind and/or class, in the event of acquired shares, or characteristics,
                                         in the event of other securities;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | form
                                         of acquisition (private transaction, trading on stock exchange, etc.);
| | - | --------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         reasons and purpose of the transaction; and
| | - | ----------------------------------------------------------------------------------------



| | ● | information
                                         regarding any agreement regulating the exercise of voting rights or the purchase and
                                         sale of our securities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Disclosure
of Information



We
are subject to the reporting requirements established by Brazilian corporate law and the regulations of the CVM. In addition,
as a result of our listing on the Novo Mercado, we must comply with the disclosure requirements under Novo Mercadoregulations.



Information
Required by the CVM



Brazilian
corporate law, securities regulations of the CVM and the rules for listing on the Novo Mercadorequire that publicly held
corporations file the following periodic information with the CVM and the B3:



| | ● | financial
                                         statements prepared in accordance with accounting principles generally accepted in Brazil
                                         (“Brazilian GAAP”) and related management and auditors’ reports, within
                                         three months from the end of the fiscal year or on the date on which they are published
                                         or made available to our shareholders, whichever occurs first, together with the Demonstrações
                                         Financeiras Padronizadas (a report on a standard form containing relevant financial information
                                         derived from our financial statements required to be filled out by us and filed with
                                         the CVM);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | notices,
                                         filed on the same date as their publication, of our annual shareholders’ meeting;
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         summary of the decisions made at annual shareholders’ meetings, filed on the day
                                         following the meeting;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         copy of the minutes of the annual shareholders’ meeting, filed within ten days
                                         from the date the meeting is held;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | ITR,
                                         a quarterly report on a standard form containing our relevant quarterly corporate, business
                                         and financial information, together with a special review report issued by our independent
                                         auditor, filed within 45 days from the end of each quarter (except for the last quarter
                                         of each year) or upon disclosure of such information to shareholders or third parties,
                                         whichever occurs first;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





67







| | ● | Formulário
                                         de Referência, filed within five months from the end of each corporate year and
                                         in the event a request to conduct public offering is filed with the CVM;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Formulário
                                         Cadastral, which must be updated within seven business days if any of the information
                                         contained therein is modified;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | management
                                         report within one month before a shareholders’ meeting is scheduled to occur, giving
                                         notice that certain management documents, as required by Brazilian corporate law, are
                                         available to shareholders; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | any
                                         documents deemed necessary for shareholders to exercise their voting rights.
| | - | -------------------------------------------------------------------------------------------------------------------------



In
addition to the foregoing, we must also file the following information with the CVM and the B3:



| | ● | notices,
                                         filed on the same date of their publication, of our extraordinary or special shareholders’
                                         meetings;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         summary of the decisions made at extraordinary or special shareholders’ meetings,
                                         filed on the day following the meeting;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | minutes
                                         of our extraordinary or special shareholders’ meetings, filed within ten days from
                                         the date they are held;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         copy of any shareholders’ agreement, filed on the date on which it is registered
                                         with us;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | any
                                         press release giving notice of material facts, filed on the date the release is published
                                         in the press;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | information
                                         on any filing for corporate reorganization, the reason for such filing, special financial
                                         statements prepared for obtaining a legal benefit, and, if applicable, any plan for payment
                                         of holders of debentures, as well as copies of any judicial decision granting such request,
                                         filed concurrently with the corporate reorganization and on the date we take notice of
                                         it;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | information
                                         on any bankruptcy filing, on the same day we become aware of it, or the filing of a judicial
                                         claim, as applicable;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         copy of any judicial decision granting a bankruptcy request and appointing a bankruptcy
                                         trustee, filed on the date we take notice of it; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | other
                                         information as requested by the CVM.
| | - | -----------------------------------------------------------------------------------



Information
Required by the B3 from Companies Listed on the Novo Mercado



In
addition to the disclosure obligations imposed by Brazilian corporate law and the CVM, we also must comply with the following
additional disclosure requirements under Novo Mercadoregulations:



| | ● | no
                                         later than six months following our listing on the Novo Mercado, we must disclose
                                         financial statements and consolidated financial statements at the end of each quarter
                                         (except the last quarter of each year) and at the end of each fiscal year, including
                                         a cash-flow statement which must indicate, at a minimum, the changes in our cash and
                                         cash equivalents, divided into operating, finance and investment cash flows;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | from
                                         the date on which we release our financial statements relating to the second fiscal year
                                         following our listing on the Novo Mercadowe must, no later than four months after
                                         the end of the fiscal year: (i) prepare our annual financial statements and consolidated
                                         financial statements, if applicable, in accordance with U.S. GAAP, or IFRS, in Reaisor U.S. dollars, in the English language, together with (a) management reports, (b)
                                         notes to the financial statements, including information on net income and shareholders’
                                         equity calculated at the end of such fiscal year in accordance with Brazilian GAAP, as
                                         well as management proposals for allocation of net profits, and (c) our independent auditors’
                                         report; or (ii) disclose, in the English language, complete financial statements, management
                                         reports and notes to the financial statements, prepared in accordance with Brazilian
                                         corporate law, accompanied by (a) an additional explanatory note regarding the reconciliation
                                         of year-end net income and shareholders’ equity calculated in accordance with Brazilian
                                         GAAP and U.S. GAAP or IFRS, as the case may be, which must include the main differences
                                         between the accounting principles used, and (b) the independent auditors’ report;
                                         and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | from
                                         the date on which we release our first financial statements prepared as provided above,
                                         no later than 15 days following the term established by law for the publication of quarterly
                                         financial information, we must disclose, in its entirety, our quarterly financial information
                                         translated into the English language or disclose our financial statements and consolidated
                                         financial statements in accordance with Brazilian GAAP, U.S. GAAP or IFRS as provided
                                         above, accompanied by the independent auditors’ report.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
addition, we must disclose the following information together with our ITR:



| | ● | our
                                         consolidated balance sheet, consolidated statement of operations, and a discussion and
                                         analysis of our consolidated performance, if we are obliged to disclose consolidated
                                         financial statements at year-end;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | any
                                         direct or indirect ownership interest exceeding 5% of our capital stock, considering
                                         any ultimate individual beneficial owner;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         number and characteristics, on a consolidated basis, of our shares held directly or indirectly
                                         by our principal shareholders, members of our board of directors, board of executive
                                         officers and fiscal council;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | changes
                                         in the numbers of our shares held by the principal shareholders, members of our board
                                         of directors, board of executive officers and fiscal council in the immediately preceding
                                         12 months;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in
                                         an explanatory note, our cash-flow statement and consolidated cash-flow statement, which
                                         should indicate the cash flow changes in cash balance and cash equivalent, separated
                                         into operating, finance and investment cash flows;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





68







| | ● | the
                                         number of free-float shares, and their percentage in relation to the total number of
                                         issued shares; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         existence of arbitration provision for disputes arising between us and principal shareholders,
                                         directors, executive officers and members of the fiscal council before the Market Arbitration
                                         Chamber of B3.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
following information must also be included in the company’s Formulário de Referência:



| | ● | information
                                         relating to the ownership interest exceeding 5% of our capital stock, number and characteristics,
                                         on a consolidated basis, of the company’s shares directly or indirectly held by
                                         the principal shareholders and members of the board of directors, executive officers
                                         and fiscal council;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | changes
                                         in the number of securities held by such persons within the immediately preceding 12
                                         months;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         number of free-float shares and their respective percentage in relation to the total
                                         amount of shares issued; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | submission
                                         to arbitration.
| | - | -------------------------------------------------------------------



Disclosure
of Material Information



According
to Law No. 6,385, of December 7, 1976, as amended, and the rules published by the CVM, we must disclose any material information
(fato relevante) related to our business to the CVM and the B3 and publish a notice of such material information. Material
information consists of any decision by the principal shareholders, any resolution taken by our board of directors, by the executive
officers or by the shareholders in a shareholders meeting, or any other act or fact of political, technical, managerial, economic
or financial nature occurring or related to us that could materially influence the price of our securities, the decision of investors
to buy, sell or hold our securities, or the investors’ decision to exercise any rights deriving from our securities.



Under
special circumstances, we may request confidential treatment by the CVM of certain material developments affecting us.



Going
Private Process



A
public company may become a private company if it or any controlling shareholders conduct a public tender offer for the acquisition
of all of the issuer’s outstanding common shares in accordance with the rules and regulations of Brazilian corporate law,
the CVM and the Novo Mercadolisting segment which, among other things, require that the offering price be the fair value
of our common shares, as defined pursuant to a valuation report, and that holders of common shares representing more than two
thirds of the outstanding common shares should have agreed to the delisting or accepted the offer; provided, however, that for
such purposes outstanding common shares shall mean common shares the holders of which shall have enrolled to participate in the
offer.



The
minimum offering price shall correspond to the fair value of our common shares, as determined in a valuation report prepared by
specialized and independent firm of recognized experience.



Pursuant
to Brazilian corporate law, fair value is defined as the valuation of our Company, determined based on individually or in the
aggregate, shareholders’ equity, shareholders’ equity valued at market price, discounted cash flow, comparison by
multiples, the market price of shares issued by us, or any other valuation method accepted by the CVM. Shareholders holding at
least 10.0% of our outstanding common shares may require our management to call a special shareholders’ meeting to determine
whether to perform another valuation using the same or a different valuation method. This request must be made within 15 days
following the disclosure of the price to be paid for the common shares in the public offering. The shareholders that make such
request, as well as those voting in its favor, must reimburse us for any costs involved in preparing the new valuation, if the
new valuation price is not higher than the original valuation price. If the new valuation price is higher than the original valuation
price, the public offering must either be cancelled or carried out at the higher price, and this decision must also be disclosed
to the market.



Pursuant
to our bylaws and the Novo Mercadolisting rules, the minimum price per share in the public offer to be conducted to purchase
our outstanding common shares for purposes of going private, must correspond to the fair value of our common shares as determined
in a valuation report prepared by a specialized and independent firm of recognized experience, chosen at a shareholders’
meeting from a list of three institutions presented by our board of directors, pursuant to a decision of our Company, our directors
and officers and/or shareholders.



Delisting
from the Novo Mercado



We
may at any time delist our common shares from the Novo Mercado, provided that shareholders representing the majority of
our common shares approve the action and that we give at least 30 days written notice to the B3. Our delisting from the Novo
Mercadowould not result in the loss of our registration as a public company with the B3.



If
the shareholders’ meeting decides to delist in order for an issuer’s common shares to be tradable outside the Novo
Mercado, or as a result of a corporate reorganization in which the surviving company is not listed on the Novo Mercado,
the issuer’s controlling shareholders or group of controlling shareholders should conduct a tender offer to purchase the
issuer’s outstanding common shares. In any such event, the offering price per common share should be no less than the fair
value of our common shares, as determined in a valuation report prepared by a specialized and independent firm of recognized experience,
chosen at a shareholders’ meeting from a list of three institutions presented by our board of directors, pursuant to a decision
of shareholders representing at least the majority of the issuer’s outstanding shares present at such a shareholders’
meeting, with blank votes not taken into account and with one vote entitled to each share. All the expenses and costs incurred
in connection with the preparation of the valuation report must be paid by any controlling shareholders and/or the issuer, as
offerors.



In
the event of delisting from the Novo Mercado, any controlling shareholders must conduct a tender offer to acquire common
shares from the other shareholders at fair value, pursuant to the Novo Mercadolisting rules and according to applicable
legislation and regulation. Such tender offer must be disclosed to the B3 and the market immediately after the company receives
notice regarding the termination of the agreement for participation in the Novo Mercadolisting segment.





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According
to the Novo Mercadolisting rules, in the event of a transfer of our control within 12 months following our delisting from
the Novo Mercado, the acquirer of control and the seller of control must offer to purchase the common shares of all other
holders of our common shares for the same price, terms and conditions offered to the seller of control, adjusted for inflation.
Furthermore, in the event the price received by any controlling shareholders for their common shares is higher than the value
of the public offering conducted, the selling controlling shareholders and the acquirer will be required to jointly pay the difference
to the acceptors of the respective public offering.



If
our common shares are delisted from the Novo Mercado, we will not be permitted to have common shares listed on the Novo
Mercadofor a two-year period following the delisting date, unless there is a change in our control following this delisting
from the Novo Mercado.



Public
Tender Offers



Our
by-laws provide that if any of the above-mentioned cases occur simultaneously, a single public tender offer will be conducted
provided that the procedures of all types of public tender offers are compatible, the target shareholders are not adversely affected
and the CVM authorizes it.



In
addition, our by-laws permit that we or the shareholders responsible for the public tender offer assure its execution through
any shareholder, third party and, if applicable, ourselves. Nevertheless, we or the responsible shareholder, as the case may be,
are still responsible for the public tender offer until its completion.



Arbitration



We,
our shareholders, our directors and officers, and the members of our fiscal council, when active, should submit to arbitration
for any dispute relating to the application, legality, effectiveness, interpretation, violation and effects of violation of the
provisions in the agreement for participation in the Novo Mercadolisting segment, and to the Novo Mercadolisting
rules, the arbitration regulation instituted by the B3, the provisions of Brazilian corporate law, our bylaws, the rules of the
CMN and the Central Bank, the regulations of the CVM and the B3 and other rules generally applying to the Brazilian capital markets.
Any such dispute should be settled by arbitration carried out before B3 Arbitration Chamber.



Change
of Control



According
to the Novo Mercadolisting rules, the sale of control over an issuer, in one transaction or in a series of successive
transactions should contemplate an obligation by the acquirer of control to conduct a tender offer for the acquisition of all
other outstanding common shares on the same terms and conditions offered for disposition of control so as to assure equal treatment
among all of our shareholders. For such purposes, any selling controlling shareholders and the acquirer shall inform the CVM and
the B3 of the price and other conditions of such sale.



A
tender offer is also required:



| | ● | when
                                         there is a significant assignment of share subscription rights or rights in other securities
                                         convertible into an issuer’s common shares, which results in the transfer of its
                                         control;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in
                                         case of an indirect transfer of an issuer’s control, through a transfer of control
                                         over any controlling shareholders; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in
                                         case a shareholder acquires the issuer’s control pursuant to a private transaction
                                         for purchase of its common shares. In this event, the acquiring shareholder must conduct
                                         a tender offer for the acquisition of all the issuer’s outstanding common shares
                                         on the same terms and conditions offered disposition of control and must also reimburse
                                         the counterparties from whom it has acquired its common shares on the stock exchange
                                         in the six-month period preceding the transaction that resulted in a change in control.
                                         The reimbursement amount corresponds to the positive difference between the price paid
                                         to the seller of control and the adjusted price paid in transactions carried out on the
                                         stock exchange during this six-month period.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
buyer, if applicable, should take all necessary measures to reconstitute the minimum 25% free float within six months of the acquisition.



The
controlling shareholders may not transfer the common shares to the purchaser of our control, and the issuer may not register the
transfer of such common shares, if the buyer fails to execute the controlling shareholders’ consent agreement (Termo
de Anuência dos Controladores). Moreover, the issuer will not register any shareholders’ agreement that regulates
the exercise of control rights until the signatories thereto execute the controlling shareholders’ consent agreement.



Diffused
Control



Control
of us is deemed diffused if exercised by (i) a shareholder holding less than 50% of our capital stock; (ii) shareholders jointly
holding more than 50% of our capital stock, provided that each shareholder holds less than 50% of our capital stock, and (a) their
respective ownership of our common shares is not subject to voting rights agreement, (b) they are not under common control and
(c) do not represent a common interest; and (iii) shareholders holding less than 50% of our capital stock who have executed a
shareholders’ agreement in respect of their ownership of our common shares.



Duties
and Responsibilities of Controlling and Others Shareholders



If
one shareholder or group of shareholders exercises in a permanent manner control over us, such shareholder or group of shareholders
will be subject to the duties and responsibilities of the Brazilian corporate law. On the other hand, if there is no such shareholder
or group of shareholders, we will be subject to diffused control. The diffused control is always transitory and shareholders can
exercise their control over us by using their voting rights, if there are shareholders in a sufficient number who can influence
the decisions taken at a general shareholders meeting. If our control is diffused according to the Brazilian corporate law, there
are no specific liability rules for each group of shareholders even if one shareholder or group of shareholder effectively exercises
the diffused control, since this diffused control is exercised with the approval of the other shareholders. Nevertheless, the
rules concerning shareholders’ liability, such as in abuse of voting rights and conflict of interests, apply to any company,
including those with diffused control.





70







In
addition, the rules of the Novo Mercadoacknowledge that diffused control can involve a specific controlling shareholder,
which is the one who actually exercises it. The rules of the Novo Mercadoalso acknowledge the specific liability of a
certain shareholder or group of shareholders for misconduct.



According
to the definition of diffused control, certain obligations and responsibilities apply to certain groups of shareholders who are
not necessarily identified as controlling shareholders, such as the obligation to conduct a tender offer if such group of shareholders
votes for delisting from the Novo Mercadoor if delisting occurs due to non-compliance with the obligations of the Novo
Mercadolisting segment regulations. Therefore, if our control becomes diffused, all shareholders will be subject to the liability
rules set forth in the Brazilian corporate law. However, some specific rules and liabilities set forth in the Novo Mercadolisting segment regulations only apply for those shareholders who have the power to control our business, even though not
formally identified as controlling shareholders.



Protection
against Shareholder Concentration



Our
by-laws contain a provision intended to avoid concentration of our shares in the hands of a small group of investors. This provision
requires that any shareholder who becomes an owner of our common shares, or certain other rights, in an amount greater than or
equal to 20% of our total capital stock (excluding any involuntary ownership interest additions arising from the cancellation
of treasury shares or capital decrease resulting from the cancellation of shares), within 60 days from the date of acquisition,
is required to publicly tender for all of our capital stock. Cresud, including the entities controlled by it or under its common
control and their legal successors (but excluding any acquirer of shares from Cresud and its successors) are not covered under
this obligation, which applies only to investors who acquired our shares after our listing in the Novo Mercadosegment
of B3 as of April 2006.



The
percentage of 20% is not applicable to a person who becomes the holder of our shares in a number greater than 20% of the total
shares as a result of (i) legal succession, provided that the shareholder sells the exceeding shares no later than 60 days as
from the material event; (ii) merger of another company into our company; (iii) merger of shares of another company into our company;
or (iv) subscription of shares, conducted in a primary offering, approved at the shareholders meeting, called by our board of
directors, which proposal for capital increase has determined the share price based on the economic value calculated according
to an economic and financial appraisal report conducted by a specialized company with renowned experience in publicly held companies.



Shareholders
that acquire 20% of our common shares are obligated under this provision to: (i) make a tender offer to acquire the entirety our
outstanding issued shares; (ii) ensure that the tender offer is conducted in an auction held at the B3 (iii) offer to pay a price
per share as described below, and (iv) offer to pay cash in exchange for the shares, in Brazilian Reais.



The
tender offer price per share issued, provided that CVM regulations do not require the adoption of calculation criteria that would
lead to a greater acquisition price, in which case, such CVM criteria would prevail, shall not be less than the higher amount
among: (i) the market value of our share established in an expert valuation report prepared and approved by shareholders in accordance
with our bylaws; (ii) 150% of the share price established in the most recent capital increase made through public offering within
the 24-month period preceding the date on which the tender offer becomes mandatory, adjusted by the IPC-A index pro ratauntil
actual payment; or (iii) 150% of the average listing price of our shares during the 90-day period preceding the tender offer on
the stock exchange where they are mostly traded.



Launch
of such a tender offer does not preclude other shareholders, or even us, from launching a competing tender offer in accordance
with the applicable regulations.



In
the event the acquiring shareholder fails to perform the obligations set forth in our bylaws, our board of directors shall call
a special shareholders’ meeting to approve the suspension of the shareholder rights of such defaulting shareholder, without
prejudice to losses and damages that may be claimed from it.



Any
proposed amendment to limit our shareholders’ right to conduct a tender offer or to exclude it will impose on the shareholder(s)
voting in favor of said amendment or exclusion at such shareholders’ meeting, the obligation of conducting such tender offer.
Each shareholder shall have the right to one vote in any special shareholders’ meeting called to decide on amendments or
elimination of such provisions of our bylaws.



Suspension
of Rights of Acquiring Shareholders for Violation of Our bylaws



In
the event an acquiring shareholder violates the provisions of our by-laws regarding the need to conduct a public tender offer
in the event of a change of our control or the acquisition of shares representing 15% or more of our common shares, the rights
of such acquiring shareholder will be suspended pursuant to a resolution passed at our shareholders’ meeting, which must
be convened in the event of such noncompliance. The acquiring shareholder will not be entitled to vote at such meeting.



Public
Meeting with Analysts



Pursuant
to Novo Mercadoregulations, at least once a year we must hold a public meeting with analysts and any other interested
parties to disclose information regarding our projects and forecasts, as well as our economic and financial situation.



Annual
Calendar



Pursuant
to the Novo Mercadoregulations, we must, by the end of January of each year, publicly disclose and send to the B3 an annual
calendar with a schedule of our corporate events. Any subsequent modification to such schedule must be immediately and publicly
disclosed and sent to the B3.



Duty
to Disclose Related Party Transactions



Pursuant
to the Novo Mercadoregulations, we must publicly disclose and send to the B3 information about any contract between us
and our related parties or managers of our related parties, whenever the amount of such contract in any one-year period reaches
the greater of R$0.2 million or 1% of our shareholders’ equity.



The
disclosure must specify the contract’s object, term, amount, termination conditions and impact, if any, on our business
and management.





71







Additionally, pursuant to CVM rules, in the event a related party has interest in the approval of any matter by
our shareholders at a shareholders’ meeting, we must inform our shareholders of at least: the name and qualifications of
the related party; the relationship between us and the related party; the amount of our common shares and other securities, directly
or indirectly, held by the related party; all credits and amounts outstanding between us and the related party; a description
of the transaction submitted to shareholders’ meeting approval; management’s recommendation in relation to the proposed
related party transaction, indicating our advantages and disadvantages; and, in the event of an intercompany transaction, an affirmation
by our management that the transaction was conducted at an arms-length basis or that the compensation is appropriate, and analysis
of the related party transaction’s terms and conditions in relation to the terms and conditions of similar transactions
entered into by third parties. See “Item 7—Major Shareholders and Related Party Transactions.”



Description
of Outstanding Warrants



On
March 15, 2006, our board of directors approved the issuance to our founding shareholders of two series of warrants to acquire
our common shares. The first series of such warrants, or “First Series Warrants,” consists of 256,000 warrants, and
the second series, or the “Second Series Warrants,” consists of an additional 256,000 warrants. Such warrants were
delivered to our founding shareholders in proportion to their respective interests in our capital stock on the date such warrants
were issued. The First Series Warrants grant their holders the right to acquire such number of our common shares as will represent
20% of our total capital stock on the date such warrants are exercised, and the Second Series Warrants grant their holders the
right to acquire such number of our common shares as will represent an additional 20% of our total capital stock on the date such
warrants are exercised. We believe that these warrants are an incentive and contribute to ensure our founding shareholders’
commitment towards the development of our activities and the implementation of the business plan prepared by them.



First
Series Warrants



The
First Series Warrants will grant their holders the right to acquire our common shares at an exercise price of R$1,000 per share
which was the issue price per share in our 2006 initial public offering, subject to the price adjustment described below.



We
believe that the First Series Warrants represent an efficient mechanism of compensating our founding shareholders as those securities
will only represent an economic gain in a scenario of a rising share price for our shares. The remuneration provided by the First
Series Warrants will not interfere with our results or financial condition as a gain to our founding shareholders will be generated
by market conditions. The principal terms of the First Series Warrants are as follows:



Series
and Right to Acquire Common Shares



The
First Series Warrants were issued in three sub-series, which differ in relation to the date on which their respective rights to
acquire shares becomes effective. All three sub-series of the First Series Warrants are currently exercisable and tradable. The
First Series Warrants expire on the date 15 years after the publication in Brazil of the notice of completion of our initial public
offering (Anúncio de Encerramento), which notice was published on May 15, 2006.



Warrant
Shares



Each
lot of 1,000 warrants of the First Series Warrants originally entitled its respective holder to acquire one of our common shares,
subject to the adjustments described in “Item 10—Additional Information—Adjustment of the Number of Common Shares
for Subscription” below.



Adjustment
of the Number of Common Shares for Subscription



If
we issue shares that do not result from the exercise of the rights conferred under the warrants, the number of shares to which
the warrants grant rights will be adjusted. Such increase in the number of shares that may be acquired by the holders of the warrants
shall be proportional to such number of shares newly issued by us in relation to the number of shares existing before such issuance.
Accordingly, holders of warrants whose rights had not yet been exercised shall be entitled to maintain the right to subscribe
the same percentage interest in our capital stock as they were entitled to prior to such new issuance. The number of shares granted
upon the exercise of the warrants will also be adjusted in order to reflect capital reductions, stock splits, reverse stock splits
and share bonuses transactions, if any. Such adjustments will also apply to the issue of new warrants, debentures or other securities
convertible into our common shares.



Exercise
Price



The
exercise price of the First Series Warrants was originally equivalent to the issue price per share in our 2006 initial public
offering, i.e., R$1,000.00 (a thousand Reais) per share. However, such exercise price is subject to certain adjustments
and restatements as set forth at our board of directors meeting held on March 15, 2006.



If
new shares that do not result from the exercise of our warrants are issued, the exercise price of the warrants shall be adjusted
to reflect the price per share of such subsequent offerings. Such calculation will be made based on: (i) the total amount in Reaisof our capital stock after our 2006 initial public offering, excluding amounts relating to retained profits converted into
equity, plus (ii) the total proceeds in Reais received by us from any subsequent issuance of shares after our 2006 initial
public offering that do not result from any exercise of our warrants, divided by (iii) the total number of shares outstanding
after our 2006 initial public offering in addition to the shares issued thereafter, not including any shares issued as a result
of any exercise of our warrants. The exercise price resulting from the application of such rules is also subject to the adjustment
procedures set forth in the following paragraph.



Exercise
Price Adjustment



For
purposes of adjustment of the exercise price of the First Series Warrants, the amounts set forth in items (1) and (2) in the paragraph
above shall be adjusted, respectively, from (a) the date of the announcement of commencement of our 2006 initial public offering
and (b) the date of each new issuance of shares made by us that does not result from any exercise of our warrants, based on the
Compounded Consumer Price Index (IPC-A), during the period, if such periods are equal to or longer than 12 months. On June 30,
2018, the exercise price of the First Series Warrants was R$19.57 per share.





72







Exercise
of Rights



The
First Series Warrants may be exercised by their holders upon at least five business day advance notice to us.



Characteristics
of the Common Shares for Subscription



The
shares to be acquired pursuant to the First Series Warrants will be entitled to the same rights granted to other shares.



73







Holders
of First Series Warrants



As
of September 30, 2018, the holders of our First Series Warrants are:



|Holder        |  | Number |         |  | % | 
|------------- |  | ------ | ------- |  | - | 
|Agro Managers |  |        | 4,364   |  |   | 
|Cape Town LLC |  |        | 64,000  |  |   | 
|Cresud        |  |        | 177,004 |  |   | 
|Others        |  |        | 10,632  |  |   | 
|Total         |  |        | 256,000 |  |   | 



Second
Series Warrants



The
Second Series Warrants grant their holders the right to acquire our common shares only in the event of (i) a transfer of control
in accordance with our bylaws, the Novo Mercadolisting regulations and CVM rules, (ii) the acquisition of a significant
interest in our capital stock in accordance with our bylaws, or (iii) a mandatory tender offer in accordance with CVM regulations.
In any of these events, a tender offer for the acquisition of all of our shares must be made. The exercise price for the shares
underlying the Second Series Warrants will be equal to the price established in such tender offer.



The
purpose of creating the Second Series Warrants was to provide our founding shareholders with a mechanism that would allow them
under certain circumstances to maintain their interest in our capital stock. The principal terms of the Second Series Warrants
are described below.



Series
and Right to Acquire Common Shares



The
Second Series Warrants were issued on March 15, 2006. The Second Series Warrants expire on the date 15 years after the publication
in Brazil of the notice of completion of our initial public offering (Anúncio de Encerramento), which notice was
published on May 15, 2006. The Second Series Warrants may be exercised by their holders only under the following circumstances:



Transfer
of control: In the event of a transfer of control of our company, as prescribed by articles 41, 42 and 43 of our by-laws,
the Novo Mercadolisting regulations and CVM rules, provided that the resulting business or business group has no direct
participation of our founding shareholders or persons related to them. The Second Series Warrants in this case must be exercised
within ten business days of the publication of the tender offer made in connection with such transfer of control.



Acquisition
of significant interest: In the event of an acquisition by any shareholder, individually or jointly with other shareholders,
of an interest in our company representing an amount equal to or greater than 20% of our capital stock, as prescribed by article
44 of our by-laws, provided that the resulting business or business group has no direct participation of our founding shareholders
or persons related to them. The Second Series Warrants in this case must be exercised within ten business days of the publication
of the tender offer made in connection with such acquisition of a significant interest.



Mandatory
tender offer in accordance with CVM rules: In the event a mandatory tender offer is made for our shares under CVM regulations,
provided that the resulting business or business group has no direct participation of our founding shareholders or persons related
to them. The Second Series Warrants in this case must be exercised within ten business days of the publication of such mandatory
tender offer.



Transferability



The
Second Series Warrants may be transferred only among our founding shareholders, their controlling shareholder or their affiliates.



Warrant Shares



Each
lot of 1,000 warrants of the Second Series Warrants originally entitled its respective holder to acquire one of our common shares,
subject to the adjustments described in “Item 10—Additional Information—Adjustment of the Number of Common Shares
for Subscription” below.



Adjustment
of the Number of Common Shares for Subscription



If
we issue shares that do not result from the exercise of the rights conferred under the warrants, the number of shares to be issued
upon exercise of the warrants will be adjusted. Such increase in the number of shares that may be subscribed by the holders of
the warrants shall be proportional to such number of shares newly issued by us in relation to the number of shares existing before
such issuance. Accordingly, holders of warrants whose preemptive rights had not yet been exercised shall be entitled to maintain
the right to subscribe the same percentage interest in our capital stock as they were entitled to prior to such new issuance.
The number of shares granted upon the exercise of the warrants will also be adjusted in order to reflect capital reductions, stock
splits, reverse stock splits and share bonuses transactions, if any. Such adjustments will also apply to the issue of new warrants,
debentures or other securities convertible into our common shares.



Exercise
Price



The
exercise price of the Second Series Warrants will be equal to the tender offer prices described above under “—Second
Series Warrants.”



Exercise of Rights



The
right conferred by the Second Series Warrants may be exercised by their holders by sending notice to us within ten business days
from the date of the public announcement of the applicable tender offer. The Second Series Warrants may be exercised only if our
founding shareholders continue to own in the aggregate at least 80% of the number of shares held by them immediately after consummation
of our 2006 initial public offering. On the date hereof, our founding shareholders own 100% of the number of shares they held
immediately after the consummation of our 2006 initial public offering.





74







Characteristics
of the Common Shares for Subscription



The
shares to be acquired under the Second Series Warrants will be entitled to the same rights granted to our other shares.



Holders
of Second Series Warrants



As
of the date of this annual report, the holders of our Second Series Warrants are:



|Holder        |  | Number |         |  | % | 
|------------- |  | ------ | ------- |  | - | 
|Agro Managers |  |        | 4,364   |  |   | 
|Cape Town LLC |  |        | 64,000  |  |   | 
|Cresud        |  |        | 177,004 |  |   | 
|Others        |  |        | 10,632  |  |   | 
|Total         |  |        | 256,000 |  |   | 



Adjustment
in the Event of a Corporate Restructuring



In
the event of any corporate restructuring or similar action, apart from such events mentioned above and which may have an impact
on or represent a reduction of the rights of the holders of the First Series Warrants or the Second Series Warrants, it is stipulated
in the meeting of our board of directors held on March 15, 2006 that we shall use our best efforts to negotiate with the holders
of the First Series Warrants and Second Series Warrants, as appropriate, to set forth new exercise conditions, seeking to preserve
the rights originally granted to the holders of such warrants, their economic and corporate value, the amount of underlying shares
and their exercise price. For the purpose of such negotiation, decisions by the holders of the warrants shall be determined through
a majority vote, and the holders of the First Series Warrants and the Second Series Warrants shall negotiate and vote separately.
Any disputes will be submitted to the Arbitration Chamber of the B3 (Câmara de Arbitragem do Mercado) pursuant to
our bylaws.



|C. | Material
Contracts
|-- | ------------------



See
“Item 4—Information on the Company—Business Overview—Material Agreements.”



|D. | Exchange
Controls
|-- | -----------------



There
are no restrictions on ownership or voting of our capital stock by individuals or legal entities domiciled outside Brazil. However,
the right to convert dividend payments, interest on shareholders’ equity payments and proceeds from the sale of our capital
stock into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation
and foreign exchange regulations, which generally require, among other things, the registration of the relevant investment with
the Central Bank and the CVM.



Investments
in our common shares by (i) a holder not deemed to be domiciled in Brazil for Brazilian tax purposes, (ii) a non-Brazilian holder
who is registered with the CVM under Resolution No. 4,373, or (iii) the depositary, are eligible for registration with the Central
Bank. This registration (the amount so registered is referred to as registered capital) allows the remittance outside Brazil of
foreign currency, converted at the commercial market rate, acquired with the proceeds of distributions on, and amounts realized
through, dispositions of our common shares. The registered capital per common share purchased in the form of an American Depositary
Security, or ADS, or purchased in Brazil and deposited with the depositary in exchange for an ADS, will be equal to its purchase
price (stated in U.S. dollars). The registered capital per common share withdrawn upon cancellation of a Common ADS will be the
U.S. dollar equivalent of (1) the average price of a common share on the B3 on the day of withdrawal, or (2) if no common shares
were traded on that day, the average price on the B3 in the 15 trading sessions immediately preceding such withdrawal. The U.S.
dollar equivalent will be determined on the basis of the average commercial market rates quoted by the Central Bank on the relevant
dates.



Annex
V Regulations



Resolution
No. 1,927 of the National Monetary Council, as amended, provides for the issuance of depositary receipts in foreign markets in
respect of shares of Brazilian issuers. It restates and amends Annex V to Resolution No. 1,289 of the National Monetary Council,
known as the Annex V Regulations. The ADS program was approved under the Annex V Regulations by the Central Bank and the CVM prior
to the issuance of the ADSs. Accordingly, the proceeds from the sale of ADSs by ADR holders outside Brazil are not subject
to Brazilian foreign investment controls, and holders of the ADSs who are not resident in a Tax Haven Jurisdiction are entitled
to favorable tax treatment. See “Item 10—Additional Information—Taxation— Brazilian Tax Considerations.”



We
pay dividends and other cash distributions with respect to our common shares in Reais. We have obtained an electronic certificate
of foreign capital registration from the Central Bank in the name of the depositary with respect to our ADSs to be maintained
by the custodian on behalf of the depositary. Pursuant to this registration, the custodian is able to convert dividends and other
distributions with respect to our common shares represented by ADSs into foreign currency and remit the proceeds outside Brazil
to the depositary so that the depositary may distribute these proceeds to the holders of record of the ADSs.



Investors
residing outside Brazil may register their investments in our shares as foreign portfolio investments under Resolution No. 4,373
(described below) or as foreign direct investments under Law No. 4,131 (described below). Registration under Resolution No. 4,373
or Law No. 4,131 generally enables non-Brazilian investors to convert dividends, other distributions and sales proceeds received
in connection with registered investments into foreign currency and to remit such amounts outside Brazil. Registration under Resolution
No. 4,373 affords favorable tax treatment to non-Brazilian portfolio investors who are not resident in a Tax Haven Jurisdiction.
See “Item 10—Additional Information—Taxation—Brazilian Tax Considerations.”



In
the event that a holder of ADSs exchanges those ADSs for the underlying common shares, the holder must:



| | ● | sell
                                         those shares on the B3 and rely on the depositary’s electronic registration for
                                         five business days from the date of exchange to obtain and remit U.S. dollars outside
                                         Brazil upon the holder’s sale of our common shares;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





75







| | ● | convert
                                         its investment in those shares into a foreign portfolio investment under Resolution No.
                                         4,373; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | convert
                                         its investment in those shares into a direct foreign investment under Law No. 4,131.
| | - | -------------------------------------------------------------------------------------------------------------------------------------



The
custodian is authorized to update the depositary’s electronic registration to reflect conversions of ADSs into foreign portfolio
investments under Resolution No. 4,373.



If
a holder of ADSs elects to convert its ADSs into a foreign direct investment under Law No. 4,131, the conversion will be effected
by the Central Bank after receipt of an electronic request from the custodian with details of the transaction. If a foreign direct
investor under Law No. 4,131 elects to deposit its common shares into the relevant ADR program in exchange for ADSs, such holder
will be required to present to the custodian evidence of payment of capital gains taxes. The conversion will be effected by the
Central Bank after receipt of an electronic request from the custodian with details of the transaction. See “Item 10—Additional
Information—Taxation—Brazilian Tax Considerations” for details of the tax consequences to an investor residing
outside Brazil of investing in our common shares in Brazil.



If
a holder of ADSs wishes to convert its investment in our shares into either a foreign portfolio investment under Resolution No.
4,373 or a foreign direct investment under Law No. 4,131, it should begin the process of obtaining its own foreign investor registration
with the Central Bank or with the CVM, as the case may be, in advance of exchanging the ADSs for the underlying common shares.
A non-Brazilian holder of common shares may experience delays in obtaining a foreign investor registration, which may delay remittances
outside Brazil, which may in turn adversely affect the amount, in U.S. dollars, received by the non-Brazilian holder.



Unless
the holder has registered its investment with the Central Bank, the holder may not be able to convert the proceeds from the disposition
of, or distributions with respect to, such common shares into foreign currency or remit those proceeds outside Brazil. In addition,
if the non-Brazilian investor resides in a Tax Haven Jurisdiction or is not an investor registered under Resolution No. 4,373,
the investor will be subject to less favorable tax treatment than a holder of ADSs. See “Item 10—Additional Information—Taxation—Brazilian
Tax Considerations.”



Resolution
4,373



On
September 29, 2014, the CMN issued Resolution No. 4,373, which provides for the new mechanism for non-resident investments in
the Brazilian financial and capital markets. Resolution No. 4,373 became effective on March 30, 2015. Resolution No. 4,373 was
the prior mechanism for that and its provisions were significantly the same as the ones described below.



All
investments made by a non-Brazilian investor under Resolution No. 4,373 are subject to an electronic registration with the Central
Bank. This registration permits non-Brazilian investors to convert dividend payments, interest on shareholders’ equity payments
and proceeds from the sale of our share capital into foreign currency and to remit such amounts outside Brazil.



Under
Resolution No. 4,373, non-Brazilian investors registered with the CVM may invest in almost all financial assets and engage in
almost all transactions available to Brazilian investors in the Brazilian financial and capital markets without obtaining a separate
Central Bank registration for each transaction, provided that certain requirements are fulfilled. Under Resolution No. 4,373,
the definition of a non-Brazilian investor includes individuals, legal entities, mutual funds and other collective investment
entities, domiciled or headquartered outside Brazil.



Pursuant
to Resolution No. 4,373, non-Brazilian investors must:



| | ● | appoint
                                         at least one representative in Brazil with powers to take action relating to its investments;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | ● | appoint
                                         an authorized custodian in Brazil for its investments, which must be a financial institution
                                         duly authorized by the Central Bank and CVM;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | complete
                                         the appropriate foreign investor registration forms;
| | - | ------------------------------------------------------------------------------------------------------



| | ● | register
                                         as a non-Brazilian investor with the CVM;
| | - | -------------------------------------------------------------------------------------------



| | ● | register
                                         its investments with the Central Bank; and
| | - | --------------------------------------------------------------------------------------------



| | ● | obtain
                                         a taxpayer identification number from the Brazilian federal tax authorities.
| | - | ----------------------------------------------------------------------------------------------------------------------------



The
securities and other financial assets held by a non-Brazilian investor pursuant to Resolution No. 4,373 must be registered or
maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM or be registered
in registration, clearing and custody systems authorized by the Central Bank or by the CVM. In addition, the trading of securities
held under Resolution No. 4,373 is restricted to transactions carried out on stock exchanges or through organized over-the-counter
markets licensed by the CVM.



The
offshore transfer or assignment of the securities or other financial assets held by non-Brazilian investors pursuant to Resolution
No. 4,373 are prohibited, except for transfers resulting from a corporate reorganization effected abroad by a non-Brazilian investor,
or occurring upon the death of an investor by operation of law or will.



Law
4,131



To
obtain a certificate of foreign capital registration from the Central Bank under Law No. 4,131, a foreign direct investor must:



| | ● | register
                                         as a foreign direct investor with the Central Bank;
| | - | -----------------------------------------------------------------------------------------------------



| | ● | obtain
                                         a taxpayer identification number from the Brazilian tax authorities;
| | - | --------------------------------------------------------------------------------------------------------------------





76







| | ● | appoint
                                         a tax representative in Brazil; and
| | - | ------------------------------------------------------------------------------------



| | ● | appoint
                                         a representative in Brazil for service of process in respect of suits based on the Brazilian
                                         corporate law.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Foreign
direct investors under Law No. 4,131 may sell their shares in either private or open market transactions, but these investors
will generally be subject to less favorable tax treatment on gains with respect to our common shares. See “Item 10—Additional
Information— Taxation—Brazilian Tax Considerations.”



|E. | Taxation
|-- | --------



The
following discussion contains a description of the material Brazilian and U.S. federal income tax consequences of the acquisition,
ownership and disposition of our common shares or ADSs. The following discussion does not purport to be a comprehensive description
of all the tax considerations that may be relevant to a decision to purchase, hold or dispose of our common shares or ADSs. This
discussion is based upon the tax laws of Brazil and the United States and regulations under these tax laws as currently in effect,
which are subject to change.



Although
there is at present no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had
discussions that may culminate in such a treaty. No assurance can be given, however, as to whether or when a treaty will enter
into force or how it will affect the U.S. holders of our common shares or ADSs.



Prospective
purchasers of our common shares or ADSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership
and disposition of our common shares or ADSs in their particular circumstances.



Brazilian
Tax Considerations



The
following discussion contains a description of the material Brazilian tax consequences, subject to the limitations set forth herein,
of the acquisition, ownership and disposition of our common shares or ADSs by a holder not deemed to be domiciled in Brazil for
purposes of Brazilian taxation, or a Non-Resident Holder. This discussion is based on the tax laws of Brazil and regulations thereunder
in effect on the date hereof, which are subject to change (possibly with retroactive effect). This discussion does not specifically
address all of the Brazilian tax considerations that may be applicable to any particular Non-Resident Holder. Therefore, each
Non-Resident Holder should consult its own tax advisor about the Brazilian tax consequences of an investment in our common shares
or ADSs.



Individuals
domiciled in Brazil and Brazilian companies are taxed in Brazil on the basis of their worldwide income which includes earnings
of Brazilian companies’ foreign subsidiaries, branches and affiliates. The earnings of branches of foreign companies and
non-Brazilian residents, or nonresidents, in general are taxed in Brazil only on income derived from Brazilian sources.



Dividends



Dividends
paid by a Brazilian corporation, such as us, including stock dividends and other dividends paid to a Non-Resident Holder of our
common shares or ADSs, are currently not subject to income tax withholding in Brazil to the extent that such amounts are related
to profits generated after January 1, 1996. Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian
income tax withholding at varying rates, according to the tax legislation applicable to each corresponding year.



On
September 16, 2013, Brazilian tax authorities issued Normative Ruling 1,397/13, which, among other things, established rules regarding
the withholding tax exemption on dividend distributions. According to Normative Ruling 1,397/13, the withholding tax exemption
on dividend income would only be applicable to dividends distributed out of profits determined in accordance with Brazilian accounting
rules that were effective until December 31, 2007 (old Brazilian GAAP). In this sense, if (i) taxpayers make dividend distributions
based on new Brazilian accounting rules already conforming to IFRS principles, and (ii) such distributions are made in excess
of the dividends that could have been distributed had the profits been determined in accordance with Brazilian accounting rules
that were effective until December 31, 2007, the “excess distribution” would be deemed as taxable income in the hands
of the beneficiary and subject to withholding income tax at the rate of 15% or 25%.



With
the enactment of Law 12,973/14, this taxation has been eliminated, since this law determined the exemption of Income Tax on the
excess distribution of dividends provided that these have been assessed from 2008 to 2013 and from 2015 onwards. The risk for
the dividends paid in excess remains only with respect to profit accrued in 2014 for legal entities that have not opted for the
advance of effects of Law 12,973/14 for 2014, due to the provisions of RFB Regulatory Instruction 1,492/14.



Interest
on Shareholders’ Equity



Law
No. 9,249, oDecember 26, 1995, as amended, allows a Brazilian corporation, such as us, to make distributions to shareholders of
interest on shareholders’ equity, and treat those payments as a deductible expense for purposes of calculating Brazilian
corporate income tax, and, since 1997, social contribution tax on net profit as well, as long as the limits described below are
observed. These distributions may be paid in cash. For tax purposes, the deductible amount of this interest is limited to the
daily pro rata variation of the TJLP, as determined by the Central Bank from time to time, and the amount of the deduction may
not exceed the greater of:



| | ● | 50%
                                         of net income (after the deduction of social contribution tax on net profit but before
                                         taking into account the provision for corporate income tax and the amounts attributable
                                         to shareholders as interest on shareholders’ equity) for the period in respect
                                         of which the payment is made; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 50%
                                         of the sum of retained profits and income reserves as of the date of the beginning of
                                         the period in respect of which the payment is made.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Payment
of interest on shareholders’ equity to a Non-Resident Holder is subject to withholding income tax at the rate of 15%, or
25% if the Non-Resident Holder is domiciled in (i) a country or location that does not impose income tax, or (ii) where the maximum
income tax rate is lower than 20.0%, or (iii) a Tax Haven Jurisdiction. See “Interpretation of the Discussion of the Definition
of “Tax Haven Jurisdictions” below.





77







These
payments of interest on shareholders’ equity to a Non-Resident Holder may be included, at their net value, as part of any
mandatory dividend. To the extent payment of interest on shareholders’ equity is so included, we are required to distribute
to shareholders an additional amount to ensure that the net amount received by them, after payment of the applicable income tax
withholding, plus the amount of declared dividends, is at least equal to the mandatory dividend.



Payments
of interest on shareholders’ equity are decided by our shareholders, at our annual shareholders meeting, on the basis of
recommendations of our board of directors. No assurance can be given that our board of directors will not recommend that future
distributions of profits should be made by means of interest on shareholders’ equity instead of by means of dividends.



Taxation
of Gains



Under
Law No. 10,833/2003, the gain on the disposition or sale of assets located in Brazil by a Non-Resident Holder, whether to another
non-Brazilian resident or to a Brazilian resident, may be subject to income tax withholding in Brazil.



With
respect to the disposition of our common shares, as they are assets located in Brazil, the Non-Resident Holder should be subject
to income tax on the gains assessed, following the rules described below, regardless of whether the transactions are conducted
in Brazil or with a Brazilian resident.



With
respect to our ADSs, although the matter is not entirely clear, arguably the gains realized by a Non-Resident Holder upon the
disposition of ADSs to another non-Brazilian resident will not be taxed in Brazil, on the basis that ADSs are not “assets
located in Brazil” for the purposes of Law No. 10,833/2003. We cannot assure you, however, that the Brazilian tax authorities
or the Brazilian courts will agree with this interpretation. As a result, gains on a disposition of ADSs by a Non-Resident Holder
to a Brazilian resident, or even to a non-Brazilian resident, in the event that courts determine that ADSs would constitute assets
located in Brazil, may be subject to income tax in Brazil according to the rules applicable to our common shares, described below.



As
a general rule, gains realized as a result of a disposition of our common shares or ADSs are the positive difference between the
amount realized on the transaction and the acquisition cost of our common shares or ADSs.



Under
Brazilian law, however, income tax rules on such gains can vary depending on the domicile of the Non-Resident Holder, the type
of registration of the investment by the Non-Resident Holder with the Central Bank and how the disposition is carried out, as
described below.



Gains realized on a disposition of shares carried out on a Brazilian stock exchange (which includes the organized
over-the-counter market) are:



| | ● | exempt
                                         from income tax when realized by a Non-Resident Holder that (1) has registered its investment
                                         in Brazil with the Central Bank under the rules of Resolution 4,373 (a “4,373 Holder”),
                                         and (2) is not a resident in a country or location which is defined as a Tax Haven Jurisdiction
                                         for those purposes; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | subject
                                         to income tax at a rate of 15% in the case of gains realized by (A) a Non-Resident Holder
                                         that (1) is not a 4,373 Holder and (2) is not a Tax Haven Jurisdiction resident; or by
                                         (B) a Non-Resident Holder that (1) is a 4,373 Holder, and (2) is a Tax Haven Jurisdiction
                                         resident. In this case, a withholding income tax of 0.005% shall be applicable and withheld
                                         by the intermediary institution (i.e. a broker) that receives the order directly from
                                         the Non-Resident Holder, which can be later offset against any income tax due on the
                                         capital gain earned by the Non-Resident Holder; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | subject
                                         to income tax at a rate of up to 25% in any other case, including a case of gains assessed
                                         by a Non-Resident Holder that is not a 4,373 Holder, and is a Tax Haven Jurisdiction
                                         resident for this purpose (as described below). In these cases, a withholding income
                                         tax of 0.005% of the sale value will be applicable and can be later offset with the eventual
                                         income tax due on the capital gain.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
the case of redemption of securities or capital reduction by a Brazilian corporation, such as us, the positive difference between
the amount effectively received by the Non-Resident Holder and the corresponding acquisition cost is treated, for tax purposes,
as capital gain derived from sale or exchange of shares not carried out on a Brazilian stock exchange market, and is therefore
subject to income tax at the rate of 15% or 25%, as the case may be.



The
deposit of our common shares in exchange for ADSs will be subject to Brazilian income tax if the acquisition cost of the shares
is lower than (1) the average price per share on a Brazilian stock exchange on which the greatest number of such shares were sold
on the day of deposit, or (2) if no shares were sold on that day, the average price on the Brazilian stock exchange on which the
greatest number of shares were sold in the 15 trading sessions immediately preceding such deposit. In such case, the difference
between the acquisition cost and the average price of the shares calculated as above will be considered to be a capital gain subject
to income tax withholding at the rate of 15% or 25%, as the case may be. In some circumstances, there may be arguments to claim
that this taxation is not applicable in the case of a Non-Resident Holder that is a 4,373 Holder and is not a resident in a Tax
Haven Jurisdiction for this purpose. The availability of these arguments to any specific holder of our common shares will depend
on the circumstances of such holder. Prospective holders of our common shares should consult their own tax advisors as to the
tax consequences of the deposit of our common shares in exchange for ADSs.



Any
exercise of preemptive rights relating to our common shares or ADSs will not be subject to Brazilian taxation. Any gain on the
sale or assignment of preemptive rights relating to our common shares, including the sale or assignment carried out by the depositary,
on behalf of Non-Resident Holders of ADSs, will be subject to Brazilian income taxation according to the same rules applicable
to the sale or disposition of our common shares.



Interpretation
of the Discussion of the Definition of “Tax Haven Jurisdictions”



On
November 28, 2014 Brazilian tax authorities enacted Normative Instruction No. 488 listing (i) the countries and jurisdictions
considered Tax Haven Jurisdictions (countries and jurisdictions that do not tax income or tax it at a rate below 17% or where
the local legislation does not allow access to information related to the shareholding composition of legal entities or to their
ownership or to the identity of the effective beneficiary of the income attributed to non-residents), and (ii) the privileged
tax regimes, which definition is provided by Law No. 11,727, of June 23, 2008. Although we believe that the best interpretation
of the current tax legislation could lead to the conclusion that the above mentioned “privileged tax regime” concept
should apply solely for purposes of Brazilian transfer pricing and thin capitalization rules, we cannot assure you whether subsequent
legislation or interpretations by the Brazilian tax authorities regarding the definition of a “privileged tax regime”
provided by Law No. 11,727 will also apply to a Non-Resident Holder on payments potentially made by a Brazilian source.





78







We
recommend prospective investors to consult their own tax advisors from time to time to verify any possible tax consequences arising
of Normative Instruction No. 1,037 and Law No. 11,727. If the Brazilian tax authorities determine that the concept of “privileged
tax regime” provided by Law No. 11,727 will also apply to a Non-Resident Holder on payments potentially made by a Brazilian
source the withholding income tax applicable to such payments could be assessed at a rate up to 25%.



Tax
on Foreign Exchange Transactions (IOF/Exchange Tax)



Brazilian
law imposes the IOF/Exchange Tax on the conversion of Reais into foreign currency and on the conversion of foreign currency
into Reais. Foreign exchange agreements entered into as from October 7, 2014 in connection with inflows of funds related
to investments carried out by Non- Resident Holders in the Brazilian financial and capital markets are subject to the IOF/Exchange
Tax at a zero percent rate. Foreign exchange transactions related to outflows of funds in connection with investments made in
the Brazilian financial and capital markets are subject to IOF/Exchange Tax at a zero percent rate. This zero percent rate applies
to payments of dividends and interest on shareholders’ equity to Non-Resident Holders with respect to investments in the
Brazilian financial and capital markets. Other than these transactions, the rate applicable to most foreign exchange transactions
is 0.38%. Other rates may apply to particular transactions and the Brazilian government may increase the rate at any time up to
25% on the foreign exchange transaction amount. However, any increase in rates is only authorized to apply to future transactions.



Tax
on Transactions Involving Bonds and Securities (IOF/Securities Tax)



Brazilian
law also imposes the IOF/Securities Tax due on transactions involving bonds and securities, including those carried out on a Brazilian
stock exchange. The rate of the IOF/Securities Tax applicable to transactions involving our common shares is currently zero. However,
the rate of the IOF/Securities Tax applicable to the transfer of our common shares with the specific purpose of enabling the issuance
of ADSs is currently zero. This rate is applied on the product of (1) the number of shares which are transferred, multiplied by
(2) the closing price for those shares on the date prior to the transfer or, if such closing price is not available on that date,
the last available closing price for those shares. The Brazilian government may increase the rate of the IOF/Securities Tax at
any time up to 1.5% per day of the transaction amount, but only in respect of transactions carried out after the increase in rate
enters into force.



Other
Brazilian Taxes



There
are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of our common shares
or ADSs by a Non-Resident Holder except for gift and inheritance taxes levied by some states in Brazil. There are no Brazilian
stamp, issue, registration, or similar taxes or duties payable by Non-Resident Holders of our common shares or ADSs.



U.S.
Federal Income Tax Considerations



The
following summary describes the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our
common shares and ADSs as of the date hereof. Except where noted, this discussion deals only with U.S. Holders (as defined below)
that hold our common shares or ADSs as capital assets for U.S. federal income tax purposes (generally, property held for investment).
This summary does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are
subject to special treatment under the U.S. federal income tax laws, including if you are:



| | ● | a
                                         dealer in securities or currencies;
| | - | ------------------------------------------------------------------------------



| | ● | a
                                         financial institution;
| | - | -----------------------------------------------------------------



| | ● | a
                                         regulated investment company;
| | - | ------------------------------------------------------------------------



| | ● | a
                                         real estate investment trust;
| | - | ------------------------------------------------------------------------



| | ● | an
                                         insurance company;
| | - | --------------------------------------------------------------



| | ● | a
                                         tax-exempt organization;
| | - | -------------------------------------------------------------------



| | ● | a
                                         person that received our common shares or ADSs as compensation for the performance of
                                         services;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         person holding our common shares or ADSs as part of a hedging, integrated or conversion
                                         transaction or a straddle;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         person deemed to sell common shares or ADSs under the constructive sale provisions of
                                         the Internal Revenue Code of 1986, as amended (the “Code”);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         trader in securities that has elected the mark-to-market method of accounting for your
                                         securities;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         person liable for alternative minimum tax;
| | - | -------------------------------------------------------------------------------------



| | ● | a
                                         person who owns or is deemed to own 10% or more of our stock (by vote or value);
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         partnership or other pass-through entity for U.S. federal income tax purposes;
| | - | -------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         person required to accelerate the recognition of any item of gross income with respect
                                         to our common shares or ADSs as a result of such income being recognized on an applicable
                                         financial statement; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





79







| | ● | a
                                         person whose “functional currency” is not the U.S. dollar.
| | - | -----------------------------------------------------------------------------------------------------



As
used herein, “U.S. Holder” means a beneficial owner of our common shares or ADSs that is for U.S. federal income tax
purposes:



| | ● | an
                                         individual citizen or resident of the United States;
| | - | ------------------------------------------------------------------------------------------------



| | ● | a
                                         corporation (or other entity treated as a corporation for U.S. federal income tax purposes)
                                         created or organized in or under the laws of the United States, any state thereof or
                                         the District of Columbia;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | an
                                         estate the income of which is subject to U.S. federal income taxation regardless of its
                                         source; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
                                         trust if it (1) is subject to the primary supervision of a court within the United States
                                         and one or more U.S. persons have the authority to control all substantial decisions
                                         of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations
                                         to be treated as a U.S. person.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The
discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions thereunder at the date
hereof, and such authorities may be repealed, revoked or modified (possibly on a retroactive basis) so as to result in U.S. federal
income tax consequences different from those discussed below. In addition, this summary is based, in part, upon representations
made by the depositary to us and assumes that the deposit agreement, and all other related agreements, will be performed in accordance
with their terms.



If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our common shares or ADSs,
the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you
are a partner of a partnership holding our common shares or ADSs, you should consult your tax advisors.



This
summary does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular
circumstances and does not address the Medicare tax on net investment income or the effects of any state, local or non-U.S. tax
laws.



If
you are considering the purchase, ownership or disposition of our common shares or ADSs, you should consult your own tax advisors
concerning the U.S. federal income tax consequences to you in light of your particular situation as well as any consequences arising
under other U.S. federal tax laws and the laws of any other tax jurisdiction.



ADSs



If
you hold ADSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying common shares
that are represented by such ADSs. Accordingly, deposits or withdrawals of our common shares for ADSs will not be subject to U.S.
federal income tax.



Taxation
of Distributions



Subject
to the discussion under “—Passive Foreign Investment Company” below, distributions on our common shares or ADSs
(including amounts withheld to reflect Brazilian withholding taxes and distributions of interest on shareholders’ equity,
as described above under “—Brazilian Tax Considerations”) will be taxable as dividends to the extent paid out
of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends (including
withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you,
in the case of our common shares, or by the depositary, in the case of our ADSs. Such dividends, however, will not be eligible
for the dividends received deduction allowed to corporations.



Under
current law, dividends received by non-corporate U.S. shareholders of qualified foreign corporations will be subject to U.S. federal
income tax at lower rates than other types of ordinary income if certain conditions are met. A foreign corporation generally is
treated as a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADSs backed
by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance
indicates that our ADSs (which are listed on the NYSE), but not our common shares, are readily tradable on an established securities
market in the United States. Thus, we do not believe that dividends that we pay on our common shares that are not represented
by ADSs currently meet the conditions required for these reduced tax rates. There can be no assurance that our ADSs will be considered
readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding
period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment
income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our
status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend
is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance
applies even if the minimum holding period has been met. You should consult your tax advisors regarding the application of this
legislation to your particular circumstances.



Notwithstanding
the foregoing, non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us
if we are a passive foreign investment company (a “PFIC”) in the taxable year in which such dividends are paid or
in the preceding taxable year (as discussed under “—Passive Foreign Investment Company” below).



The
amount of any dividend paid in Reais will equal the U.S. dollar value of the Reais received, calculated by reference
to the exchange rate in effect at the date the dividend is actually or constructively received by you, in the case of our common
shares, or by the depositary, in the case of our ADSs, regardless of whether the Reais are converted into U.S. dollars
at that time. If the Reais received as a dividend are not converted into U.S. dollars at the date of receipt, you will
have a tax basis in the Reais equal to their U.S. dollar value at the date of receipt. Any gain or loss realized on a subsequent
conversion or other disposition of the Reais will be treated as U.S. source ordinary income or loss.



Subject
to certain conditions and limitations, Brazilian withholding taxes on dividends may be treated as foreign taxes eligible for credit
against your U.S. federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on our common
shares or ADSs will be treated as income from sources outside the United States and will generally constitute passive category
income. Further, in certain circumstances, if you have held our common shares or ADSs for less than a specified minimum period
during which you are not protected from risk of loss, or are obligated to make payments related to the dividends, you will not
be allowed a foreign tax credit for foreign taxes imposed on dividends paid on our common shares or ADSs. If you do not elect
to claim a U.S. foreign tax credit, you may instead claim a deduction for Brazilian income tax withheld, but only for a taxable
year in which you elect to do so with respect to all foreign income taxes paid or accrued in such taxable year. The rules governing
the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit
under your particular circumstances.





80







To
the extent that the amount of any distribution (including amounts withheld to reflect Brazilian withholding taxes and
distributions of interest on shareholders’ equity, as described above under “—Brazilian Tax
Considerations”) exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S.
federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in
the adjusted basis of our common shares or ADSs, and the balance in excess of adjusted basis will be taxed as capital gain
recognized on a sale or exchange (as discussed below under “—Taxation of Capital Gains”). However, we do
not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect
that a distribution will generally be treated as a dividend (as discussed above).



Distributions
of common shares or ADSs that are received as part of a pro rata distribution to all of our shareholders generally will not be
subject to U.S. federal income tax.



Passive
Foreign Investment Company



In
general, we will be a PFIC for any taxable year in which:



| | ● | at
                                         least 75% of our gross income is passive income, or
| | - | -----------------------------------------------------------------------------------------------



| | ● | at
                                         least 50% of the value (determined based on a quarterly average) of our assets is attributable
                                         to assets that produce or are held for the production of passive income.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For
purposes of determining whether we are a PFIC, cash is a passive asset and passive income generally includes dividends, interest,
royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from
a related person). In addition, income from commodities transactions is generally considered passive unless such income is derived
in the active conduct of a commodities business. If we own at least 25% (by value) of the stock of another corporation, we will
be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation’s assets and receiving
our proportionate share of the other corporation’s income.



Based
on the composition of our income and assets, including goodwill, we do not believe that we were classified as a PFIC for U.S.
federal income tax purposes for our most recent taxable year. The rules in this regard are not entirely clear, however, and there
can be no assurance that the Internal Revenue Service (“IRS”) will not successfully assert a contrary position. In
addition, the determination of whether we are a PFIC is made annually. Accordingly, it is possible that our status as a PFIC may
change in any future taxable year due to changes in our asset or income composition. Although the determination of whether we
are a PFIC is made annually, if we are a PFIC for any taxable year in which you hold our common shares or ADSs, you will be subject
to special tax rules discussed below for that year and for each subsequent year in which you hold the common shares or ADSs (even
if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, you can avoid the continuing impact
of the PFIC rules by making a special election (a “Purging Election”) to recognize gain in the manner described below
as if your common shares or ADSs had been sold on the last day of the last taxable year during which we were a PFIC. In addition,
a new holding period would be deemed to begin for your common shares or ADSs for purposes of the PFIC rules. After the Purging
Election, your common shares or ADSs with respect to which the Purging Election was made will not be treated as shares in a PFIC
unless we subsequently become a PFIC. You are urged to consult your own tax advisor about the availability of this election, and
whether making the election would be advisable in your particular circumstances.



If
we are a PFIC for any taxable year during which you hold our common shares or ADSs, you will be subject to special tax rules with
respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a
pledge, of common shares or ADSs. Distributions received in a taxable year that are greater than 125% of the average annual distributions
received during the shorter of the three preceding taxable years or your holding period for the common shares or ADSs will be
treated as excess distributions. Under these special tax rules:



| | ● | the
                                         excess distribution or gain will be allocated ratably over your holding period for the
                                         common shares or ADSs,
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         amount allocated to the current taxable year, and any taxable year prior to the first
                                         taxable year in which we were a PFIC, will be treated as ordinary income, and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         amount allocated to each other year will be subject to tax at the highest tax rate in
                                         effect for that year and the interest charge generally applicable to underpayments of
                                         tax will be imposed on the resulting tax attributable to each such year.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



You
will also generally be required to file IRS Form 8621 if you hold our common shares or ADSs in any year in which we are classified
as a PFIC.



If
we are a PFIC for any taxable year during which you hold our common shares or ADSs and any of our non-U.S. subsidiaries is also
a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the
application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.



In
certain circumstances, in lieu of being subject to the rules discussed above, with respect to excess distributions and recognized
gains, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided
that such stock is regularly traded on a qualified exchange. Under current law, the mark-to-market election may be available to
holders of ADSs because the ADSs are listed on the NYSE, which constitutes a qualified exchange, although there can be no assurance
that the ADSs will be “regularly traded” for purposes of the mark-to-market election. It should also be noted that
only our ADSs and not our common shares are listed on a qualified stock exchange in the United States. Our common shares are listed
on the B3, which must meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified
exchange under applicable U.S. Treasury regulations for purposes of the mark-to-market election, and no assurance can be given
that our common shares will be “regularly traded” for purposes of the mark-to-market election.





81







If
you make an effective mark-to-market election, you will include in each year that we are a PFIC as ordinary income the excess
of the fair market value of your common shares or ADSs at the end of the year over your adjusted tax basis in the common shares
or ADSs. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the common
shares or ADSs over their fair market value at the end of the year, but only to the extent of the net amount previously included
in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year that we
are a PFIC any gain you recognize upon the sale or other disposition of your common shares or ADSs will be treated as ordinary
income and any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income as
a result of the mark-to-market election.



Your
adjusted tax basis in the common shares or ADSs will be increased by the amount of any income inclusion and decreased by the amount
of any deductions under the mark-to-market rules. If you make a mark-to-market election, it will be effective for the taxable
year for which the election is made and all subsequent taxable years unless the common shares or ADSs are no longer regularly
traded on a qualified exchange or the IRS consents to the revocation of the election. You are urged to consult your tax advisor
about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.



Alternatively,
you can sometimes avoid the rules described above by electing to treat a PFIC as a “qualified electing fund” under
Section 1295 of the Code. However, this option is not available to you because we do not intend to comply with the requirements
necessary to permit you to make this election.



You
are urged to consult your tax advisors concerning the U.S. federal income tax consequences of holding common shares or ADSs if
we are considered a PFIC in any taxable year.



Taxation
of Capital Gains



You
generally will recognize taxable gain or loss upon the sale, exchange or other taxable disposition of our common shares or ADSs
equal to the difference between the amount realized on the sale, exchange or other taxable disposition of such common shares or
ADSs and your adjusted tax basis in such common shares or ADSs. Subject to the discussion under “—Passive Foreign
Investment Company” above, such gain or loss will generally be capital gain or loss. Capital gains or losses will be long-term
capital gain or loss if our common shares or ADSs have been held for more than one year. Certain non-corporate U.S. Holders (including
individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. The deductibility
of capital losses is subject to limitations under the Code.



If
a Brazilian income tax is withheld on the sale or other disposition of our common shares or ADSs, your amount realized will include
the gross amount of the proceeds of that sale or other disposition before deduction of the Brazilian income tax. Capital gain
or loss, if any, realized by you on the sale, exchange or other taxable disposition of our common shares or ADSs generally will
be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, in the case of gain from the disposition
of common shares or ADSs that is subject to Brazilian income tax, you may not be able to benefit from the foreign tax credit for
that Brazilian income tax (i.e., because the gain from the disposition would be U.S. source), unless you can apply the credit
(subject to applicable limitations) against U.S. federal income tax payable on other income from foreign sources. Alternatively,
you may take a deduction for the Brazilian income tax if you do not take a credit for any foreign taxes paid or accrued during
the taxable year.



Other
Brazilian Taxes



You
should note that any Brazilian IOF/Exchange Tax or IOF/Securities Tax (as discussed above under “—Brazilian Tax Considerations”)
generally will not be treated as a creditable foreign tax for U.S. federal income tax purposes, although you may be entitled to
deduct such taxes, subject to applicable limitations under the Code. You should consult your tax advisors regarding the U.S. federal
income tax consequences of these taxes.



Information
Reporting and Backup Withholding



In
general, information reporting will apply to dividends (including distributions of interest on shareholders’ equity) in
respect of our common shares or ADSs and the proceeds from the sale, exchange or redemption of our common shares or ADSs that
are paid to you within the United States (and in certain cases, outside the United States), unless you establish that you are
an exempt recipient, such as a corporation. A backup withholding tax may apply to such payments if you fail to provide your correct
taxpayer identification number or certification of exempt status or fail to report in full dividend and interest income.



Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against your U.S. federal income tax liability provided the required information is timely furnished to the IRS.



The
above description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership
or disposition of our common shares or ADSs. Each holder should consult such holder’s own tax advisor concerning the overall
tax consequences to it, including the consequences under laws other than U.S. federal income tax laws, of an investment in our
common shares or ADSs.



|F. | Dividends
and Paying Agents
|-- | ---------------------------



Not
applicable.



|G. | Statement
by Experts
|-- | --------------------



Not
applicable.



|H. | Documents
on Display
|-- | --------------------



We
are subject to the reporting requirements of the Exchange Act, which requires that we file periodic reports and other information
with the SEC. As a foreign private issuer, we file annual reports on Form 20-F as opposed to Form 10-K. We do not file quarterly
reports on Form 10-Q but furnish reports on Form 6-K.





82







Our
reports and other information filed by us with the SEC are available on the SEC website at http://www.sec.gov and may also be
inspected and copied by the public at the public reference facilities maintained by the SEC at Station Place, 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549.



From
time to time, we may use our website as a channel of distribution of material company information. Financial and other material
information regarding our company is routinely posted on and accessible at www.brasil-agro.com. Information on our website is
not incorporated by reference in this annual report.



We
furnish The Bank of New York, as the depositary of our ADSs, with annual reports in English, which include a review of operations
and our audited consolidated financial statements prepared in accordance with IFRS, and our Annual Report on Form 20-F. Upon our
request, the depositary will promptly mail such reports to all record holders of ADSs. We also furnish to the depositary, in English,
all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders.
Upon our request, the depositary will make such notices, reports and communications available to holders of ADSs and will mail
to all record holders of ADSs a notice containing a summary of the information contained in any notice of a shareholders’
meeting it receives.



As
a foreign private issuer, we are exempt from the Exchange Act rules prescribing the furnishing and content of proxy statements.
As a foreign private issuer, we are also exempt from the Exchange Act rules relating to short-swing profit disclosure and liability.



|I. | Subsidiary
Information
|-- | ----------------------



Not
applicable.



ITEM
11—QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



We
are exposed to market risks arising in the normal course of our business. Market risks are beyond our control and consist of the
possibility that changes in interest rates, exchange rates, the market prices of our products and credit risks may adversely affect
the value of our financial assets and liabilities or our future cash flows or earnings.



Raw
Material Acquisition Risks



For
the acquisition of farming inputs, our primary risks are foreign-exchange variations, the supply and demand of each input, farming
commodity prices and freight prices. Our dependence on imported raw materials is also subject to supply and customs clearance
delays. We are also subject to risks regarding the availability of the specific varieties of seeds we use, which are affected
by weather conditions, among other factors.



In
addition, the price of diesel fuel, which is the primary fuel used in farming machinery and trucks, is affected by the variation
in oil prices as well as by the price-control policies adopted by the Brazilian government.



Foreign
Exchange Risks



Certain
of our income is linked to the exchange rate between the real and the U.S. dollar, and consequently our revenues are impacted
by foreign exchange fluctuations. Certain of our commodities, such as soybean, may be priced in Reais or in U.S. dollars.
In addition, certain of the inputs necessary for farming production, such as chemicals, pesticides and fertilizers, may be priced
in or based on the U.S. dollar. In order to reduce the impact on revenue, we seek to limit our foreign exchange exposure to 5%
of our total expected revenue from commodities typically priced in U.S. dollars.



On
June 30, 2018, we had a short position in U.S. dollars in the amount of US$35.8 million. The result of a hypothetical valuation
of 5% of the real in relation to the dollar would generate a profit before taxes of R$4.1 million.



Interest
Rate Risks



Exposure
to interest rates subjects us and our subsidiaries to risks arising from the effect of interest rate fluctuations on our financial
assets and liabilities. A portion of our indebtedness is subject to fixed rates of interest, while only our financings with BNDES
are subject to variable rates indexed to the TJLP rate. We do not engage in hedging transactions with respect to such financings
because we believe the interest rates charged thereon are lower than typical rates in the Brazilian market.



If
our volume of funds invested in financial instruments indexed to the CDI rate remains the same with June 30, 2018 as a base date,
a hypothetical decrease in the CDI rate of 10% would reduce our income by R$53.6 thousand monthly.



Farming
Commodity Risks



A
reduction in commodity prices would affect our margins and operating results. Commodity price variations are associated with global
supply and demand, as well as climatic, technological, commercial and economic conditions and government policies. To reduce these
risks to us from commodity price variations, we use financial instruments such as derivatives and over-the-counter instruments
including options and futures contracts negotiated in the commodities market throughout the ordinary course of our crop cycles,
from the purchase of inputs to crop planting up until harvest. We believe that the maintenance of our current hedging policy is
necessary to minimize the risks related to commodity price variations.



On
June 30, 2018, we had a short position in soybean derivatives (CBOT-futures, options and OTC contracts) in the total volume of
1,854 thousand bags.



Considering
sales volumes hedged by derivatives and the soybean price as of June 30, 2018, we believe that a hypothetical decrease of 5% in
the price of soybean not hedged by derivatives would decrease our expected revenues from grain sales for the next 12 months by
R$2.3 million.





83







Risk
Management and Hedging Policies



We
are exposed to risks derived from commodity price variations for such products as soybean, corn, sugarcane, rice and sorghum,
as well as foreign-exchange variations. We hedge our exposure to commodity price risks for our transactions through over-the-counter
instruments and maintain our exposures within pre-established limits. Such financial instruments include (i) commodity price and
exchange rate swap contracts; (ii) currency contracts that provide a fixed exchange rate in Reais for our dollar-denominated
receivables and chargeables; (iii) commodity futures contracts for soybean, corn and ethanol that allow us to buy or sell commodities
at predetermined prices; and (v) options contracts that allow us to acquire the right to buy or sell an asset at a preset price
by a certain date. Since these transactions are normally made in U.S. dollars, we hedge our exposure to foreign-exchange risks
by entering into contracts with fixed exchange rates. We have set our limit of foreign-exchange exposure to 5% of the total revenue
expected from the sale of each commodity produced by us.



Our
risk management policy seeks to protect our cash flows and expenditures, and thus we monitor the volatility and historical patterns
of the primary market trends that affect our revenue and production costs, including (i) commodity prices, commonly determined
in U.S. dollars; (ii) differences between domestic and international market prices of our commodities; (iii) exchange rates; and
(iv) prices impacting our principal production costs, including, fertilizers, pesticides and chemicals.



In
addition to monitoring these trends, our strategic planning department analyzes them in light of our exposures and positions in
the market and prepares reports on a regular basis analyzing such risks in the light of simulations under various hypothetical
situations indicating the effects on our results of different variations in market prices and conditions. Such analysis and reports
include the monitoring and assessment of: (i) the status of the commercialization and delivery of our products; (ii) updates regarding
our estimated planted area and production volumes; (iii) the distribution of sales by product and type (such as futures contracts,
options, fixed term contracts); (iv) market analysis and historical comparisons of the prices, rates and other indices that affect
our gross revenue; (v) risk analysis models and simulations such as the Monte Carlo simulation, that analyze the volatility and
sensitivity of our assets and the correlations that exist among such assets; and (vi) stress test analyses under different scenarios.
Such reports are then delivered to our risk management committee, which develops the goals and limits of our hedging strategy
and our hedging policy, which is defined and approved by our board of directors. Our risk management committee then supervises
our strategic planning department in the implementation and the execution of our hedging strategy.



84







ITEM
12— DESCRIPTION OF SECURITIES OTHER THAN
EQUITY SECURITIES



|A. | Debt
Securities
|-- | ---------------



Not
applicable.



|B. | Warrants
and Rights
|-- | -------------------



Not
applicable.



|C. | Other
Securities
|-- | ----------------



Not
applicable.



|D. | American
Depositary Shares
|-- | --------------------------



The
following table sets forth the fees and expenses that a holder of ADRs may have to pay pursuant to our Amended and Restated Deposit
Agreement, dated as of November 6, 2012 (the “Deposit Agreement”), with The Bank of New York Mellon, as depositary,
in connection with our ADS program:



Fee
and Reimbursement Provisions





|Fee
    or Charge |                                                                                                                                                                                                                                                                                                   | Relating to
|----------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|                  |                                                                                                                                                                                                                                                                                                   |            
|1.                | Taxes and other governmental charges                                                                                                                                                                                                                                                              |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|2.                | Registration fees as may be in effect for the
    registration of transfers of common shares underlying the ADRs on the share register of our company or any Brazilian registrar                                                                                                                  |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|3.                | Cable, telex and facsimile transmission expenses
    expressly provided under the Deposit Agreement                                                                                                                                                                                               |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|4.                | Expenses incurred by the depositary in the conversion
    of foreign currency                                                                                                                                                                                                                     |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|5.                | U.S.$5.00 or less per 100 ADRs (or portion thereof)                                                                                                                                                                                                                                               |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|6.                | U.S.$0.02 or less per ADR (or portion thereof)                                                                                                                                                                                                                                                    |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|7.                | U.S.$0.02 or less per ADR (or portion thereof)
    per year, subject to prior consent by the Company                                                                                                                                                                                              |            
|                  |                                                                                                                                                                                                                                                                                                   |            
|8.                | Payment of any other charges payable by the
    depositary, any of the depositary’s agents, including the depositary’s custodian, or the agents of the depositary’s
    agents in connection with the servicing of shares underlying the American Depositary Shares or other deposited securities |            





85







The
fee and reimbursement provisions described in rows seven and eight of the table above may, at the depositary’s discretion,
be billed to the holders of ADSs or deducted from one or more cash dividends or other cash distributions. For the year ended June
30, 2018, the annual fee for depositary services was charged to holders of ADSs.



A
form of the Deposit Agreement is filed as Exhibit 2.1 to this annual report on Form 20-F. We encourage you to review this document
carefully if you are a holder of ADSs.



Payment
of Taxes



ADS
holders are responsible for any taxes or other governmental charges payable on our ADSs or on the deposited securities represented
by any of our ADSs. The depositary may refuse to register any transfer of our ADSs or allow the withdrawal of the deposited securities
represented by our ADSs until such taxes or other charges are paid. It may apply payments owed to ADS holders or sell deposited
securities represented by ADSs to pay any taxes owed and ADS holders will remain liable for any deficiency. If the depositary
sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any
proceeds, or send to ADS holders any property, remaining after it has paid the taxes.



Part
II



ITEM
13—DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



ITEM
14—MATERIAL MODIFICATIONS TO THE RIGHTS
OF SECURITY HOLDERS AND USE OF PROCEEDS



None.



ITEM
15—CONTROLS AND PROCEDURES



|A. | Disclosure
Controls and Procedures
|-- | ----------------------------------



As
of the end of the period covered by this annual report on Form 20-F, management, with the participation of the Company’s
Chief Executive Officer and Chief Administrative Officer, performed an evaluation of the effectiveness of our disclosure controls
and procedures as defined in Rules 13a- 15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed
to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including the Chief Executive Officer and Chief Administrative Officer, to allow timely decisions
regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objective. Based on this evaluation, our Chief Executive Officer and Chief Administrative
Officer, concluded that, as of June 30, 2017, the design and operation of our disclosure controls and procedures were effective
at the reasonable assurance level.



|B. | Management’s
Annual Report on Internal Control Over Financial Reporting
|-- | -----------------------------------------------------------------------



The
management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting.



The
Company’s internal control over financial reporting is a process designed by, or under the supervision of, the Company’s
principal executive and financial officers and effected by the Company’s board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with IFRS, as issued by IASB.



The
Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations
of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial
statements.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis.
Therefore even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.



Our
management performed an assessment of the effectiveness of our internal control over financial reporting on June 30, 2018, utilizing
the criteria described in the “Internal Control—Integrated Framework” (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over
financial reporting was effective on June 30, 2018. Based on this assessment, management has concluded that, as of June 30, 2018,
the Company’s internal control over financial reporting was effective at the reasonable assurance level.



|C. | Attestation
Report of the Registered Public Accounting Firm
|-- | -----------------------------------------------------------



Pursuant
to applicable SEC rules, this annual report does not include an attestation report of the Company’s registered public accounting
firm.

We
will only be required to include this report once we become a large accelerated filer or otherwise cease to be an emerging growth
company.





86







|D. | Changes
in Internal Control Over Financial Reporting
|-- | ----------------------------------------------------



There
were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that occurred during the year ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.



ITEM
16A—AUDIT COMMITTEE FINANCIAL EXPERT



For
the purposes of the Sarbanes-Oxley Act, our board of directors established a fiscal council (“Fiscal Council”), which
convenes at least quarterly, and as often as it determines is appropriate to carry out its responsibilities. This committee has
responsibility for planning and reviewing our annual and quarterly reports and accounts with the involvement of our auditors during
such process, focusing particularly on compliance with legal requirements and accounting standards. The ultimate responsibility
for reviewing and approving our annual and quarterly reports and accounts remains with our board of directors.



Our
board of directors has determined that Débora de Souza Morsch, a member of the Company’s Fiscal Council, is a
“financial expert,” as such term is defined in the SEC rules. Ms. Morsch is independent, as such term is defined
in the Novo Mercadolisting rules. Our board of directors has determined that Ms. Morsch is independent under the
standards of the NYSE listing rules and Rule 10A-3 under the Exchange Act that would apply if the Company were not relying on
the exemption provided in paragraph (c)(3) of Rule 10A-3, as described in “Item 16D—Exemptions from the Listing
Standards for Audit Committees.” See “Item 6—Directors, Senior Management and Employees—Board
Practices” for information regarding Ms. Morsch’s experience.



ITEM
16B—CODE OF ETHICS



Under
Section 303A.10 of the NYSE Listed Company Manual, each U.S. company listed on the NYSE must adopt and disclose a code of business
conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive
officers. We are subject to a similar requirement under Brazilian law, and we have adopted a code of ethics that applies to our
officers and employees.



Our
code of ethics, as well as further information concerning our corporate governance practices and applicable Brazilian law, is
available on our website www.brasil-agro.com. Information on our website is not incorporated by reference in this annual report.



If
we make any substantive amendment to the code of ethics or grant any waivers to our executive officers and controller, including
any implicit waiver, from a provision of the code of ethics, we intend to disclose the nature of such amendment or waiver on our
website. During the year ended June 30, 2018, no such amendment was made or waiver granted.



ITEM
16C—PRINCIPAL ACCOUNTANT FEES AND SERVICES



The
following table describes the total amount of fees billed to us by our independent auditors for services performed in the fiscal
years ended June 30, 2018 and 2017.



|                      |  | Year Ended June 30      |      
|--------------------- |  | ----------------------- | -----
|                      |  | 2018                    |      
|                      |  | (in thousands of Reais) |      
|Audit fees(1)         |  |                         | 753.8
|Audit-related fees(2) |  |                         | 172.1
|Total fees            |  |                         | 925.9








(1)  Audit
fees in fiscal year 2018 are the aggregated fees billed by Ernst & Young Auditores Independentes S.S. for the audit of our
consolidated and annual financial statements and attestation services that are provided in connection with regulatory filings
or engagements.

(2)  Audit-related
fees in fiscal year 2018 were the fees billed by Ernst & Young Auditores Independentes S.S. for interoffice reports regarding:
(a) the audit of the consolidated reporting package and internal controls of BrasilAgro for Cresud consolidation purposes, and
(b) foreign exchange conversion review work related to BrasilAgro’s consolidation process within Cresud consolidated financial
statements.



Audit
Committee Pre-Approval Policies and Procedures



Our
board of directors has established pre-approval policies and procedures for the engagement of registered public accounting firms
for audit and non-audit services. Under such pre-approval policies and procedures, our board of directors reviews the scope of
the services to be provided by each registered public accounting firm to be engaged in order to ensure that there are no independence
issues and the services are not prohibited under applicable rules.



ITEM
16D—EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES



In
establishing a permanent Fiscal Council, the Company has availed itself of paragraph (c)(3) of Rule 10A-3 under the Exchange Act,
which provides a general exemption from the audit committee requirements for a foreign private issuer (such as the Company) with
a Fiscal Council, subject to certain requirements.



NYSE
rules require that listed companies have an audit committee that (i) is composed of a minimum of three independent directors who
are all financially literate, (ii) meets the SEC rules regarding audit committees for listed companies, (iii) has at least one
member who has accounting or financial management expertise and (iv) is governed by a written charter addressing the committee’s
required purpose and detailing its required responsibilities. However, as a foreign private issuer, the Company may rely on an
exemption from the requirement to have an audit committee. The Brazilian corporate law requires companies to have a non-permanent
Fiscal Council composed of three to five members who are elected at the general shareholders’ meeting. The Fiscal Council
operates independently from management and from a company’s external auditors. Its main function is to monitor the activities
of management, examine the financial statements of each fiscal year and provide a formal report to our shareholders.





87







The
Company has a permanent Fiscal Council that consists of three members and three alternates and which has ordinary meetings every
month.

The
members of the Company’s Fiscal Council are all financially literate, and one member has accounting expertise that qualifies
her as a financial expert. The Company believes that its Fiscal Council meets the requirements for the exemption available to
foreign private issuers under the SEC rules regarding audit committees of listed companies. The Fiscal Council is not the equivalent
of, or wholly comparable to, a U.S. audit committee. Among other differences, it is not required to meet the standards of “independence”
established in Rule 10A-3 and is not fully empowered to act on matters that are required by Rule 10A-3 to be within the scope
of an audit committee’s authority. Nonetheless, with the attributions that have been provided to the Fiscal Council to the
extent permitted by Brazilian law, the Company believes that its current corporate governance system, taken as a whole, including
the ability of the Fiscal Council to consult internal and external experts, is similar to a system having an audit committee functioning
as a committee of its Board of Directors, the main difference being that the Fiscal Council does not have authority to appoint
our independent auditors. This authority lies with the Company’s board of directors. Accordingly, the Company does not believe
that its reliance on the exemption in paragraph (c)(3) of Rule 10A-3 materially adversely affects the ability of the Fiscal Council
to act independently and to satisfy the other requirements of Rule 10A-3 to the extent permitted by the Brazilian corporate law.
For a further discussion of our Fiscal Council, see “Item 6—Directors, Senior Management and Employees— Board
Practices—Fiscal Council.”



ITEM
16E—PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS



During
the year ended June 30, 2016, we acquired a total of 3,577,900 common shares under our share buyback program, which accounted
for 10.55% of our shares outstanding (excluding the shares held by the controlling shareholder).



On
September 20, 2016, we approved a new buyback program of common shares up to the limit of 1,337,684 common shares, not exceeding
the balance of profits reserve available included in our balance sheet on June 30, 2016.



During
the year ended June 30, 2017, we acquired a total of 1,345,400 common shares under our share buyback program, which accounted
for 3.99% of our shares outstanding (excluding the shares held by the controlling shareholder).



During
the year ended June 30, 2018, we acquired a total of 50,300 common shares under our share buyback program, which accounted for
0.15% of our shares outstanding (excluding the shares held by the controlling shareholder). As of June 30, 2018, maximum number
of shares that may still be purchased under the Program was 3,086,748.



The
table below shows information about the shares purchased in each month of the fiscal year 2018 and the shares that may yet be
purchased under our share buyback program.



|Issuer Purchases of Equity Securities
|-------------------------------------
|                                     
|Period                               
|July 2017                            
|August 2017                          
|September 2017                       
|October 2017                         
|November 2017                        
|December 2017                        
|January 2018                         
|February 2018                        
|March 2018                           
|April 2018                           
|May 2018                             
|June 2018                            
|July 2018                            
|August 2018                          
|September 2018                       
|Total                                

88







ITEM
16F—CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT



Not
applicable.



ITEM
16G—CORPORATE GOVERNANCE



Under
Section 303A.11 of the NYSE Listed Company Manual and Item 16G of the Form 20-F, we are required to disclose any significant differences
in our corporate governance practices from those required to be followed by U.S. companies under the NYSE listing standards. We
have summarized these significant differences below.



We
are permitted to follow practices in Brazil in lieu of the provisions of the NYSE corporate governance standards, except that
we are required to have a qualifying audit committee under Section 303A.06 of the NYSE Listed Company Manual or avail ourselves
of an appropriate exemption. As a foreign private issuer, we have modified our fiscal council in order to avail ourselves of an
exemption from the listing standards for audit committees. See “Item 6—Directors, Senior Management and Employees—Board
Practices—Fiscal Council.” In addition, our chief executive officer is obligated, under Section 303A.12(b) of the
NYSE Listed Company Manual, to promptly notify the NYSE in writing after any of our executive officers becomes aware of any material
non-compliance with any applicable provisions of the NYSE corporate governance standards. We are also required under Section 303A.12(c)
of the NYSE Listed Company Manual to submit an annual written affirmation of compliance with applicable provisions of the rules
and, under certain circumstances, an interim written affirmation of compliance.



Majority
of Independent Directors



Under
Section 303A.01 of the NYSE Listed Company Manual, each U.S. company listed on the NYSE must have a majority of directors that
meet the independence requirements of the NYSE. Under the Novo Mercadorules, at least 20% of our directors must be independent
for purposes of those rules, and a majority of our directors currently meet that standard.



Separate
Meetings of Non-Management Directors



Under
Section 303A.03 of the NYSE Listed Company Manual, the non-management directors of each U.S. company listed on the NYSE must meet
at regularly scheduled executive sessions without management, and independent directors must meet at executive sessions without
management at least once a year. We do not have a similar requirement under Brazilian rules, but in any event, all members of
our board are non-executive directors. Our independent directors do not meet separately from directors who are not independent.



Nominating/Corporate
Governance Committee



Under
Section 303A.04 of the NYSE Listed Company Manual, each U.S. company listed on the NYSE must have a nominating/corporate governance
committee composed entirely of directors that meet the independence requirements of the NYSE. We are not required to have such
a committee under Brazilian law, and accordingly, do not have one.



Compensation
Committee



Under
Section 303A.05 of the NYSE Listed Company Manual, each U.S. company listed on the NYSE must have a compensation committee composed
entirely of directors that meet the independence requirements of the NYSE (including additional requirements applicable to compensation
committee members). Even though we are not required to have such a committee under Brazilian law, we established one on March
1, 2012. However, our Compensation Committee is not fully independent under the NYSE independence requirements because we are
not required to have one under applicable rules, and we believe that the current composition of our Compensation Committee is
appropriate for our needs. See “Item 6—Directors, Senior Management and Employees.”



The
NYSE also requires (1) listed companies to grant the compensation committee, in its sole discretion, the authority to retain or
obtain a compensation adviser, to be directly responsible for the compensation and oversight of any compensation adviser so retained
with appropriate funding from the listed company and (3) the compensation committee to assess the independence of any compensation
adviser, other than the listed company’s in-house legal counsel. As allowed under the NYSE’s listing standards, we
continue our current compensation practices in accordance with the Brazilian corporate law and Brazilian practice.



Audit
Committee



Under
Section 303A.06 of the NYSE Listed Company Manual and the requirements of Rule 10A-3 of the SEC, each U.S. company listed on the
NYSE is required to have an audit committee consisting of members that comply with the requirements of Rule 10A-3 and that meet
the independent requirements of the NYSE. In addition, the audit committee must have a written charter compliant with the requirements
of Section 303.A.07(b) of the NYSE Listed Company Manual, and the listed company must fulfill all other requirements of the NYSE
and Rule 10A-3. The SEC has recognized that, for foreign private issuers, local legislation may delegate some of the functions
of the audit committee to other bodies. We have availed ourselves of an exemption from certain of the standards for audit committees.
See “Item 16D—Exemptions from the Listing Standards for Audit Committees,” which explains how our Fiscal Council
differs from an audit committee for a U.S. listed company and is incorporated herein by reference.



Internal
Audit Function



Under
Section 303A.07(c) of the NYSE Listed Company Manual, each listed company must have an internal audit function. We do not have
a similar requirement under Brazilian rules and, therefore, do not have internal auditors.



Corporate
Governance Guidelines



Under
Section 303A.09 of the NYSE Listed Company Manual, each U.S. listed company must adopt and disclose their corporate governance
guidelines. We do not have a similar requirement under Brazilian law. However, we have listed our common shares on the Novo
Mercadoof the São Paulo Stock Exchange, which requires adherence to the corporate governance standards described under
“Item 9. The Offer and Listing-C. Markets-São Paulo Stock Exchange Corporate Governance Standards.”



Further
information concerning our corporate governance practices and applicable Brazilian law is available on our website (www.brasil-agro.com). Information on our website is not incorporated by reference in this annual report.





89







ITEM
16H—MINE SAFETY DISCLOSURE



Not
applicable.



Part
III



ITEM
17—FINANCIAL STATEMENTS



See
“Item 18—Financial Statements.”



ITEM
18—FINANCIAL STATEMENTS



See
our Consolidated Financial Statements beginning at page F-1.



ITEM
19—EXHIBITS



|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1            | Bylaws of BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (English translation) (incorporated by reference to the Report on Form 6-K furnished to the SEC on November 10, 2015, File No. 001-35723)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.1            | Form of Amended and Restated Deposit Agreement Among BrasilAgro – Companhia Brasileira de Propriedades Agrícolas, the Bank of New York Mellon and Owners and Holders of American Depositary Shares (incorporated by reference to Exhibit 2.01 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.2            | English translation of the Private Instrument of Public Deed
    of the 1st Issue of Simple Debentures, not Convertible into Shares, of the Unsecured Type, to be Transformed into
    that with In- Rem Sort of Guarantee, in a Single Series, for Private Placement of BrasilAgro – Companhia Brasileira
    de Propriedades Agrícolas dated as of February 2, 2018, by and between BrasilAgro – Companhia Brasileira de Propriedades
    Agrícolas, Interbraf Intermediação de Negócios Ltda., Cibrasec – Companhia Brasileira de
    Securitização and Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários (Instrumento
    Particular de Escritura da 1a Emissão de Debêntures Simples, Não Conversíveis em Ações,
    da Espécie Quirografária a ser Convolada na Espécie com Garantia Real, em Série Única,
    para Colocação Privada, da BrasilAgro – Companhia Brasileira de Propriedades Agrícolas). 
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.3            | English translation of the 1st Amendment to the Private Instrument of Public Deed of the 1st Issue of Simple Debentures, not Convertible into Shares, of the Unsecured Type, to be Transformed into that with In-Rem Sort of Guarantee, in a Single Series, for Private Placement of BrasilAgro – Companhia Brasileira de Propriedades Agrícolas dated as of May 21, 2018, by and between BrasilAgro – Companhia Brasileira de Propriedades Agrícolas, Interbraf Intermediação de Negócios Ltda., Cibrasec – Companhia Brasileira de Securitização and Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários (1o Aditamento ao Instrumento Particular de Escritura da 1a Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária a ser Convolada na Espécie com Garantia Real, em Série Única, para Colocação Privada, da BrasilAgro – Companhia Brasileira de Propriedades Agrícolas).
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.4            | English translation of the 2nd Amendment to the Private
    Instrument of Public Deed of the 1st Issue of Simple Debentures, not Convertible into Shares, of the Unsecured
    Type, to be Transformed into that with In-Rem Sort of Guarantee, in Two Series, for Private Placement of BrasilAgro –
    Companhia Brasileira de Propriedades Agrícolas dated as of September 10, 2018, by and between BrasilAgro – Companhia
    Brasileira de Propriedades Agrícolas, Cibrasec – Companhia Brasileira de Securitização and Pentágono
    S.A. Distribuidora de Títulos e Valores Mobiliários (2o Aditamento ao Instrumento Particular de Escritura
    da 1a Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie
    Quirografária a ser Convolada na Espécie com Garantia Real, em até Duas Séries, para Colocação
    Privada, da BrasilAgro – Companhia Brasileira de Propriedades Agrícolas).      
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1            | Stock Option Plan of BrasilAgro – Companhia Brasileira de Propriedades Agrícolas, approved by the Annual Extraordinary Shareholders’ Meeting held on October 29, 2008 (English translation) (incorporated by reference to Exhibit 4.01 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             







90







|4.2  | Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.02 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                        
|4.3  | First Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.03 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723) 
|     |                                                                                                                                                                                                                                                                                                                                        
|4.4  | Second Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.04 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)
|     |                                                                                                                                                                                                                                                                                                                                        
|4.5  | Third Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.05 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723) 
|     |                                                                                                                                                                                                                                                                                                                                        
|4.6  | Fourth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.06 to the Annual Report on Form 20-F filed with the SEC on October 31, 2013, File No. 001-35723)         
|     |                                                                                                                                                                                                                                                                                                                                        
|4.7  | Fifth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.07 to the Annual Report on Form 20-F filed with the SEC on October 31, 2013, File No. 001-35723)          
|     |                                                                                                                                                                                                                                                                                                                                        
|4.8  | Sixth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”)in connection with Fazenda Araucária (incorporated by reference to Exhibit 4.08 to the Registration Statement on Form 20-F filed with the SEC on October 19, 2016, File No. 001-35723)   
|     |                                                                                                                                                                                                                                                                                                                                        
|4.9  | Seventh Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Araucária(incorporated by reference to Exhibit 4.08 to the Registration Statement on Form 20-F filed with the SEC on October 19, 2016, File No. 001-35723)    
|     |                                                                                                                                                                                                                                                                                                                                        
|4.10 | Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.06 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)                 
|     |                                                                                                                                                                                                                                                                                                                                        
|4.11 | First Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.07 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)           
|     |                                                                                                                                                                                                                                                                                                                                        
|4.11 | Second Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.08 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)          
|     |                                                                                                                                                                                                                                                                                                                                        
|4.13 | Third Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.09 to the Registration Statement on Form 20-F filed with the SEC on October 31, 2012, File No. 001-35723)           
|     |                                                                                                                                                                                                                                                                                                                                        
|4.14 | Fourth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.12 to the Annual Report on Form 20-F filed with the SEC on October 31, 2013, File No. 001-35723)      
|     |                                                                                                                                                                                                                                                                                                                                        
|4.15 | Fifth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.13 to the Annual Report on Form 20-F filed with the SEC on October 31, 2013, File No. 001-35723)       





91







|4.16 | Sixth Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.08 to the Registration Statement on Form 20-F filed with the SEC on October 19, 2016, File No. 001-35723)                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.17 | Seventh Amendment to Agreement to Supply Sugarcane, entered into by BrasilAgro and Brenco – Companhia Brasileira de Energia Renovável (“Brenco”), in connection with Fazenda Alto Taquari (incorporated by reference to Exhibit 4.08 to the Registration Statement on Form 20-F filed with the SEC on October 19, 2016, File No. 001-35723)                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.18 | Assignment of Loan Agreements made as of the 12th day of December 2013 by Helmir S.A. to BrasilAgro Companhia Brasileira de Propriedades Agrícolas (incorporated by reference to Exhibit 4.15 to the Annual Report on Form 20-F filed with the SEC on October 31, 2014, File No. 001-35723)                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.19 | Assignment of Advisory Agreement made as of the 12th day of December 2013 by Cresud S.A.C.Y.F. y A. to BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (incorporated by reference to Exhibit 4.16 to the Annual Report on Form 20-F filed with the SEC on October 31, 2014, File No. 001-35723)                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.20 | Private Instrument of Real Properties and Rural Assets Purchase and Sale Commitment and Other Covenants, dated as of May 19, 2015, by and between Imobiliária Cremaq Ltda., BrasilAgro – Companhia Brasileira de Propriedades Agrícolas, Zmacq 3 Agropecuária Ltda. And Cremaq Agropecuária Ltda. (unofficial English translation) (incorporated by reference to Exhibit 4.17 to the Annual Report on Form 20-F filed with the SEC on November 2, 2015, File No. 001-35723)
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.21 | Summary translation of private instrument for regulation of rights and obligations between Brenco - Companhia Brasileira de Energia Renovável and BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (incorporated by reference to Exhibit 4.18 to the Annual Report on Form 20-F filed with the SEC on November 2, 2015, File No. 001-35723)                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.22 | Summary translation of agricultural subpartnership agreement between Brenco – Companhia Brasileira de Energia Renovável and BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (incorporated by reference to Exhibit 4.19 to the Annual Report on Form 20-F filed with the SEC on November 2, 2015, File No. 001-35723)                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.23 | Summary translation of sugarcane purchase and sale agreement between Brenco – Companhia Brasileira de Energia Renovável and BrasilAgro – Companhia Brasileira de Propriedades Agrícolas (incorporated by reference to Exhibit 4.20 to the Annual Report on Form 20-F filed with the SEC on November 2, 2015, File No. 001-35723)                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.24 | Summary translation of Shareholder Agreement of Cresca S.A. dated as of October 5, 2016, by and between BrasilAgro and Cresca S.A. (incorporated by reference to Exhibit 4.24 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.25 | Summary translation of the private instrument of real properties and rural assets purchase and sale commitment and other covenants, dated as of January 11, 2017, by and between Imobiliária Ceibo Ltda.,Agro Pecuária e Industrial Serra Grande Ltda., BrasilAgro and Jaborandi Agricola Ltda. (incorporated by reference to Exhibit 4.25 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.26 | Summary translation of the Private Instrument of Real Properties and Rural Assets Purchase and Sale Commitment and Other Covenants, dated as of March 23, 2017, by and between Imobiliária Araucária Ltda., Fabricio Fries, Celso Fries and BrasilAgro (incorporated by reference to Exhibit 4.26 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.27 | Summary translation of the private instrument of real properties and rural assets purchase and sale commitment and other covenants, dated as of May 22, 2017, by and between Imobiliária Araucária Ltda., Procópio & Oliveira Ltda. - ME, Marcio Antonio de Oliveira and BrasilAgro (incorporated by reference to Exhibit 4.27 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.28 | Summary translation of the private instrument of real properties and rural assets purchase and sale commitment and other covenants, dated as of June 30, 2017, by and between Imobiliária Jaborandi Ltda., Hermes Augusto Ferreira, Emerson Denis Cecchin Ferreira and Jaborandi Agrícola Ltda. (incorporated by reference to Exhibit 4.28 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                  





92







|4.29 | Summary translation of the private instrument of real properties and rural assets purchase and sale commitment and other covenants, dated as of September 15, 2017, by and between Jaborandi Agrícola Ltda., Valdeir Ribeiro da Silva and Imobiliária Jaborandi Ltda. (incorporated by reference to Exhibit 4.29 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.30 | Summary translation of the sugarcane purchase and sale agreement dated as of January 11, 2017, by and between Jaborandi Agrícola Ltda., Agro Pecuária e Industrial Serra Grande Ltda. Imobiliária Ceibo Ltda. and BrasilAgro (incorporated by reference to Exhibit 4.30 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.31 | Summary translation of the rural partnership agreement, dated as of January 11, 2017, by and between Jaborandi Agrícola Ltda., Agro Pecuária e Industrial Serra Grande Ltda., Imobiliária Ceibo Ltda. and BrasilAgro (incorporated by reference to Exhibit 4.31 to the Annual Report on Form 20-F filed with the SEC on October 26, 2017, File No. 001-35723).                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.32 | Summary translation of the rural partnership agreement, dated as of July 11, 2018, as amended on August 28, 2018, by and between 3SB Produtos Agrícolas S.A., Sinagro Produtos Agropecuários S.A., Marcos Antônio Vimercati, and Brasil Agro in connection with Fazenda Copacabana, Fazenda Dallas, Fazenda Ipanema, Jataí II, Fazenda Princesa, Fazenda Mama, Fazenda Santa Luzia, Fazenda Santa Olímpia, Santa Terezinha and Rubi, Fazenda Santa Olímpia 2 and Fazenda Mata Fresca.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.33 | Summary translation of the private instrument of commitment to purchase and sale of real properties, dated as of June 13, 2018, by and between Imobiliária Jaborandi Ltda., John Kudiess, Harald Kudiess and Jaborandi Agrícola Ltda. in connection with Fazenda Jatobá.                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.34 | Summary translation of the rural partnership agreement, dated as of June 13, 2018, by and between Jaborandi Agrícola Ltda. John Kudiess, Harold Kudiess and Imobiliária Jaborandi Ltda. in connection with Fazenda Jatobá.                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.35 | Summary translation of the private instrument of commitment to purchase and sale of real property, dated as of April 16, 2018, by and between Imobiliária Mogno Ltda., Maurício Joel de Sá and BrasilAgro in connection with Fazenda Alto Taquari.                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.36 | Summary translation of the private instrument of commitment to purchase and sale of real property dated as of April 26, 2018, by and between Imobiliária Araucária Ltda., Fabrício Fries, Diógenes Fries, Vanessa Fries, Celso Fries and BrasilAgro in connection with Fazenda Araucária.                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.37 | Summary translation of the rural partnership agreement, dated as of November 1, 2017, by and between Vanderlei Hernandes, Imobiliária Cajueiro Ltda. and BrasilAgro in connection with Fazenda Chaparral.                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.38 | Summary translation of the rural partnership agreement, dated as of August 29, 2018, by and between Valdeir Ribeiro da Silva, Imobiliária Cajueiro Ltda. and BrasilAgro in connection with Fazenda Chaparral.                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.39 | Summary translation of the rural partnership agreement, dated as of July 19, 2018, by and between Laerte Baechtold, Imobiliária Cajueiro Ltda. and BrasilAgro in connection with Fazenda Chaparral.                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.40 | English translation of the Long-Term Stock-Based Incentive Program No. 1 Approved at the Board of Directors’ Meeting of BrasilAgro – Companhia Brasileira de Propriedades Agrícolas Held on June 18, 2018.                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|8.01 | List of subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|12.1 | Certification of the Chief Executive Officer and Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|12.2 | Certification of the Chief Administrative Officer and Investors Relations Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|13.1 | Certification of the Chief Executive Officer and Chief Operating Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|13.2 | Certification of the Chief Administrative Officer and Investor Relations Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                                                                                                                                                                                                                                                   



93







Certain
promissory notes and other instruments and agreements with respect to our long-term debt were omitted from the exhibits filed
with or incorporated by reference into this annual report, none of which authorizes securities in a total amount that exceeds
10% of our total assets. In addition, certain exhibits to agreements filed with this annual report have been omitted. We hereby
agree to furnish to the Commission copies of any such omitted promissory notes, other instruments or agreements and exhibits as
the Commission requests.



The
agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure,
other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that
purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely
within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date
they were made or at any other time.



94







SIGNATURES



The
registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on Form 20-F on its behalf.





| | BRASILAGRO – COMPANHIA BRASILEIRA DE PROPRIEDADES AGRÍCOLAS       
| | ------------------------------------------------------------------
| |                                                                   
| | Date: October 29, 2018                                            
| |                                                                   
| |                                                                   
| | /s/ Andre Guillaumon                                              
| |                                                                   
| | Name: Andre Guillaumon                                            
| | Title: Chief Executive Officer and Chief Operating Officer        
| |                                                                   
| | /s/ Gustavo Javier Lopez                                          
| |                                                                   
| | Name: Gustavo Javier Lopez                                        
| | Title: Chief Administrative Officer and Investor Relations Officer







95









Consolidated Financial
Statements



BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas



As of June 30, 2018 and
2017



with Report of Independent
Registered Public Accounting Firm











BrasilAgro – Companhia
Brasileira de Propriedades Agrícolas



Consolidated Financial statements



As of June 30, 2018 and 2017



Contents





|Report of Independent Registered Public Accounting Firm | F-2
|------------------------------------------------------- | ---
|                                                        |    
|Consolidated financial statements                       |    
|                                                        |    
|Consolidated statement of financial position            | F-3
|Consolidated statement of income                        | F-5
|Consolidated statement of other comprehensive income    | F-6
|Consolidated statement of changes in equity             | F-7
|Consolidated statement of cash flows                    | F-8
|Notes to the consolidated financial statements          | F-9











Report of Independent Registered Public
Accounting Firm



To the Shareholders and the Board of Directors
of

BrasilAgro Companhia Brasileira de Propriedades
Agrícolas



Opinion on the Financial Statements



We have audited the accompanying consolidated
statements of financial position of BrasilAgro Companhia Brasileira de Propriedades Agrícolas (the Company) as of June 30,
2018 and 2017, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of
the three years in the period ended June 30, 2018, and the related notes (collectively referred to as the “consolidated financial
statements”).



In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at June 30, 2018 and 2017, and the results
of its operations and its cash flows for each of the three years in the period ended June 30, 2018, in conformity with International
Financial Reporting Standards - IFRS as issued by the International Accounting Standards Board - IASB.



Basis for Opinion



These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.



Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.



ERNST & YOUNG

Auditores Independentes S.S.



We have served as the Company’s auditor since
2012.



São Paulo, Brazil

October 29, 2018



F-2









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statement of financial position

June 30, 2018 and 2017

(In thousands of reais)





|                                           |  | Notes |      |  | 2018 |  |           | 2017 | 
|------------------------------------------ |  | ----- | ---- |  | ---- |  | --------- | ---- | 
|Assets                                     |  |       |      |  |      |  |           |      | 
|Current assets                             |  |       |      |  |      |  |           |      | 
|Cash and cash equivalents                  |  |       | 5.1  |  |      |  | 104,314   |      | 
|Marketable securities                      |  |       | 5.2  |  |      |  | 11,215    |      | 
|Derivative financial instruments           |  |       | 6    |  |      |  | 28,299    |      | 
|Accounts receivable and others             |  |       | 7    |  |      |  | 95,176    |      | 
|Inventories                                |  |       | 8    |  |      |  | 69,622    |      | 
|Biological assets                          |  |       | 9    |  |      |  | 61,993    |      | 
|Transactions with related parties          |  |       | 27   |  |      |  | 1,660     |      | 
|                                           |  |       |      |  |      |  | 372,279   |      | 
|Noncurrent assets                          |  |       |      |  |      |  |           |      | 
|Biological assets                          |  |       | 9    |  |      |  | 34,053    |      | 
|Restricted marketable securities           |  |       | 5.2  |  |      |  | 18,226    |      | 
|Derivative financial instruments           |  |       | 6    |  |      |  | 4,053     |      | 
|Deferred taxes                             |  |       | 16.1 |  |      |  | 32,742    |      | 
|Accounts receivable and others             |  |       | 7    |  |      |  | 74,775    |      | 
|Investment properties                      |  |       | 10   |  |      |  | 557,152   |      | 
|Receivables from related parties           |  |       | 27   |  |      |  | —         |      | 
|Investments in unquoted equity instruments |  |       | 11.a |  |      |  | 86        |      | 
|Property, plant and equipment              |  |       | 12   |  |      |  | 84,830    |      | 
|Intangible assets                          |  |       |      |  |      |  | 1,403     |      | 
|                                           |  |       |      |  |      |  | 807,320   |      | 
|                                           |  |       |      |  |      |  |           |      | 
|Total assets                               |  |       |      |  |      |  | 1,179,599 |      | 



See accompanying notes.



F-3









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statement of financial position

June 30, 2018 and 2017

(In thousands of reais)





|                                                |  | Note |      |  | 2018 |  |           | 2017 | 
|----------------------------------------------- |  | ---- | ---- |  | ---- |  | --------- | ---- | 
|Liabilities and equity                          |  |      |      |  |      |  |           |      | 
|Current liabilities                             |  |      |      |  |      |  |           |      | 
|Trade accounts payable and others               |  |      | 14   |  |      |  | 106,445   |      | 
|Loans, financing, debentures and finance leases |  |      | 15   |  |      |  | 70,088    |      | 
|Salaries and payroll obligations                |  |      |      |  |      |  | 14,300    |      | 
|Derivative financial instruments                |  |      | 6    |  |      |  | 10,489    |      | 
|Payables for purchase of farms                  |  |      | 13   |  |      |  | —         |      | 
|Transactions with related parties               |  |      | 27   |  |      |  | 1,831     |      | 
|                                                |  |      |      |  |      |  | 203,153   |      | 
|Noncurrent liabilities                          |  |      |      |  |      |  |           |      | 
|Trade accounts payable and others               |  |      | 14   |  |      |  | 11,298    |      | 
|Loans, financing, debentures and finance leases |  |      | 15   |  |      |  | 205,932   |      | 
|Derivative financial instruments                |  |      | 6    |  |      |  | 2,145     |      | 
|Provision for legal claims                      |  |      | 25   |  |      |  | 1,207     |      | 
|                                                |  |      |      |  |      |  | 220,582   |      | 
|Total liabilities                               |  |      |      |  |      |  | 423,735   |      | 
|                                                |  |      |      |  |      |  |           |      | 
|Equity                                          |  |      |      |  |      |  |           |      | 
|Capital                                         |  |      | 17.a |  |      |  | 584,224   |      | 
|Capital reserve                                 |  |      |      |  |      |  | 1,997     |      | 
|Treasury shares                                 |  |      | 17.f |  |      |  | (35,208   | )    | 
|Income reserves                                 |  |      |      |  |      |  | 164,968   |      | 
|Additional dividends proposed                   |  |      | 17.d |  |      |  | —         |      | 
|Other comprehensive income                      |  |      | 17.e |  |      |  | 39,883    |      | 
|Total equity                                    |  |      |      |  |      |  | 755,864   |      | 
|                                                |  |      |      |  |      |  |           |      | 
|Total liabilities and equity                    |  |      |      |  |      |  | 1,179,599 |      | 



See accompanying notes.



F-4









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statement of income

Years ended June 30, 2018, 2017 and 2016

(In thousands of reais, unless stated otherwise)





|                                                                               |  | Notes |      |  | 2018 |  |          | 2017 |  |  | 2016     |  
|------------------------------------------------------------------------------ |  | ----- | ---- |  | ---- |  | -------- | ---- |  |  | -------- | -
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Revenue                                                                        |  |       | 19.a |  |      |  | 244,278  |      |  |  | 146,911  |  
|Gain on sale of farms                                                          |  |       | 19.b |  |      |  | 39,817   |      |  |  | 26,716   |  
|Changes in fair value of biological assets and agricultural products           |  |       | 9    |  |      |  | 99,083   |      |  |  | 12,266   |  
|Adjustment to net realizable value of agricultural products after harvest, net |  |       | 8.1  |  |      |  | 883      |      |  |  | (1,655   | )
|Cost of sales                                                                  |  |       | 20   |  |      |  | (228,319 | )    |  |  | (136,362 | )
|Gross profit                                                                   |  |       |      |  |      |  | 155,742  |      |  |  | 47,876   |  
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Selling expenses                                                               |  |       | 20   |  |      |  | (10,087  | )    |  |  | (6,676   | )
|General and administrative expenses                                            |  |       | 20   |  |      |  | (34,945  | )    |  |  | (30,941  | )
|Other operating (expenses) income, net                                         |  |       | 22   |  |      |  | 35,432   |      |  |  | (6,019   | )
|Share of profit (loss) of a joint venture                                      |  |       | 11.a |  |      |  | 14,671   |      |  |  | (4,425   | )
|Operating income (loss)                                                        |  |       |      |  |      |  | 160,813  |      |  |  | (185     | )
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Financial income (expenses)                                                    |  |       |      |  |      |  |          |      |  |  |          |  
|Financial income                                                               |  |       | 23   |  |      |  | 129,323  |      |  |  | 110,090  |  
|Financial expenses                                                             |  |       | 23   |  |      |  | (137,879 | )    |  |  | (76,646  | )
|Profit
before income and social contribution taxes                             |  |       |      |  |      |  | 152,257  |      |  |  | 33,259   |  
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Income and social contribution taxes                                           |  |       | 16.2 |  |      |  | (25,919  | )    |  |  | (5,949   | )
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Net profit for the year                                                        |  |       |      |  |      |  | 126,338  |      |  |  | 27,310   |  
|                                                                               |  |       |      |  |      |  |          |      |  |  |          |  
|Basic earnings per share-in reais                                              |  |       | 24   |  |      |  | 2.3505   |      |  |  | 0.4771   |  
|Diluted earnings per share-in reais                                            |  |       | 24   |  |      |  | 2.3477   |      |  |  | 0.4742   |  



See accompanying notes



F-5









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statement of other comprehensive
income

Years ended June 30, 2018, 2017 and 2016

(In thousands of reais)





|                                                                                                    |  | 2018 |         |   | 2017 |  |        | 2016 | 
|--------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- |  | ------ | ---- | 
|                                                                                                    |  |      |         |   |      |  |        |      | 
|                                                                                                    |  |      |         |   |      |  |        |      | 
|Net profit for the year                                                                             |  |      | 126,338 |   |      |  | 27,310 |      | 
|                                                                                                    |  |      |         |   |      |  |        |      | 
|Other comprehensive income to be reclassified to profit or loss for the year in subsequent periods: |  |      |         |   |      |  |        |      | 
|Currency translation adjustment of foreign operations (Note 17.e)                                   |  |      | 27,084  |   |      |  | 3,410  |      | 
|Currency translation adjustment of joint venture spin-off  (Note 17.e / 1.1)                        |  |      | (30,616 | ) |      |  | —      |      | 
|                                                                                                    |  |      |         |   |      |  |        |      | 
|Total comprehensive income for the year                                                             |  |      | 122,806 |   |      |  | 30,720 |      | 



See accompanying notes.



F-6









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statements of changes in
equity

Years ended June 30, 2018, 2017 and 2016

(In thousands of reais)





|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  | Income reserves                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|------------------------------------------------------------- |  | --------------------------------------------------- |  |  | ------- |  |  |  | -------------------------------------------------------- | - |  |  | -------------------------------------------------------- | - |  |  | ------------------------------------------------------ |  |  |  | ----------------------------------------------------------------------------- | - |  |  | ---------------------------------------------------------------------- | - |  |  | ------------------------------------------------------------------- | - |  |  | ------------------------------------------------------------------------------- | -
|                                                              |  | Note                                                |  |  | Capital |  |  |  | Capital
                                         reserve |   |  |  | Treasury
                                         shares |   |  |  | Legal
                                         reserve |  |  |  | Reserve
                                         for investment and expansion |   |  |  | Additional
                                         dividends proposed |   |  |  | Other
                                         comprehensive income |   |  |  | Retained
                                         earnings / accumulated losses |  
|At
    June 30, 2015                                          |  |                                                     |  |  | 584,224 |  |  |  | 2,349                                                    |   |  |  | (224                                                     | ) |  |  | 8,491                                                  |  |  |  | 84,721                                                                        |   |  |  | 40,333                                                                 |   |  |  | 36,268                                                              |   |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|Payment of additional dividends                               |  |                                                     |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | (40,333                                                                | ) |  |  | —                                                                   |   |  |  | —                                                                               |  
|Treasury stock acquired                                       |  | 17.f                                                |  |  | —       |  |  |  | —                                                        |   |  |  | (39,653                                                  | ) |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Exercise of granted stock                                     |  | 17.f                                                |  |  | —       |  |  |  | (578                                                     | ) |  |  | 2,674                                                    |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Net profit for the year                                       |  |                                                     |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  |                                                                               |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | 7,989                                                                           |  
|Constitution of legal reserve                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | 529                                                    |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (529                                                                            | )
|Minimum mandatory dividends                                   |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (2,510                                                                          | )
|Additional dividends proposed                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | (2,583                                                                        | ) |  |  | 7,533                                                                  |   |  |  | —                                                                   |   |  |  | (4,950                                                                          | )
|Currency translation adjustment of foreign
    operation      |  | 17.e                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | 3,737                                                               |   |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|At
    June 30, 2016                                          |  |                                                     |  |  | 584,224 |  |  |  | 1,771                                                    |   |  |  | (37,203                                                  | ) |  |  | 9,020                                                  |  |  |  | 82,138                                                                        |   |  |  | 7,533                                                                  |   |  |  | 40,005                                                              |   |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|Additional dividends proposed                                 |  | 17d                                                 |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | (22,000                                                                       | ) |  |  | 22,000                                                                 |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Payment of additional dividends                               |  | 17d                                                 |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | (29,533                                                                | ) |  |  | —                                                                   |   |  |  | —                                                                               |  
|Exercise of granted stock                                     |  | 17.f                                                |  |  | —       |  |  |  | (246                                                     | ) |  |  | 1,076                                                    |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Cancellation of treasury stock                                |  | 17.f                                                |  |  | —       |  |  |  | —                                                        |   |  |  | 14,881                                                   |   |  |  | —                                                      |  |  |  | (14,881                                                                       | ) |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Treasury stock acquired                                       |  | 17.f                                                |  |  | —       |  |  |  | —                                                        |   |  |  | (15,551                                                  | ) |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Net profit for the year                                       |  |                                                     |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | 27,310                                                                          |  
|Constitution of legal reserve                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | 1,366                                                  |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (1,366                                                                          | )
|Minimum mandatory dividends                                   |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (6,486                                                                          | )
|Additional dividends proposed                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | 6,486                                                                  |   |  |  | —                                                                   |   |  |  | (6,486                                                                          | )
|Constitution of reserve for investment and
    expansion      |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | 12,972                                                                        |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (12,972                                                                         | )
|Currency translation adjustment of foreign
    operation      |  | 17.e                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | 3,410                                                               |   |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|At
    June 30, 2017                                          |  |                                                     |  |  | 584,224 |  |  |  | 1,525                                                    |   |  |  | (36,797                                                  | ) |  |  | 10,386                                                 |  |  |  | 58,229                                                                        |   |  |  | 6,486                                                                  |   |  |  | 43,415                                                              |   |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|Payment of additional dividends                               |  | 17d                                                 |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | (6,486                                                                 | ) |  |  | —                                                                   |   |  |  | —                                                                               |  
|Reversal of expired unpaid dividends                          |  | 17d                                                 |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | 20                                                                              |  
|Share based compensation                                      |  | 21.b                                                |  |  | —       |  |  |  | 844                                                      |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Exercise of granted stock                                     |  | 17.c                                                |  |  | —       |  |  |  | (372                                                     | ) |  |  | 2,199                                                    |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Treasury stock acquired                                       |  | 17.c                                                |  |  | —       |  |  |  | —                                                        |   |  |  | (610                                                     | ) |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | —                                                                               |  
|Net profit for the year                                       |  |                                                     |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | 126,338                                                                         |  
|Constitution of legal reserve                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | 6,317                                                  |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (6,317                                                                          | )
|Minimum mandatory dividends                                   |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (30,005                                                                         | )
|Additional dividends proposed                                 |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  |                                                                               |   |  |  | 10,995                                                                 |   |  |  | —                                                                   |   |  |  | (10,995                                                                         | )
|Constitution of reserve for investment and
    expansion      |  | 17.d                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | 79,041                                                                        |   |  |  | —                                                                      |   |  |  | —                                                                   |   |  |  | (79,041                                                                         | )
|Currency translation adjustment of foreign
    operation      |  | 17.e                                                |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | 27,084                                                              |   |  |  | —                                                                               |  
|Currency translation adjustment of joint venture
    spin-off |  | 17.e
                                         / 1.1 |  |  | —       |  |  |  | —                                                        |   |  |  | —                                                        |   |  |  | —                                                      |  |  |  | —                                                                             |   |  |  | —                                                                      |   |  |  | (30,616                                                             | ) |  |  | —                                                                               |  
|                                                              |  |                                                     |  |  |         |  |  |  |                                                          |   |  |  |                                                          |   |  |  |                                                        |  |  |  |                                                                               |   |  |  |                                                                        |   |  |  |                                                                     |   |  |  |                                                                                 |  
|At
    June 30, 2018                                          |  |                                                     |  |  | 584,224 |  |  |  | 1,997                                                    |   |  |  | (35,208                                                  | ) |  |  | 16,703                                                 |  |  |  | 137,270                                                                       |   |  |  | 10,995                                                                 |   |  |  | 39,883                                                              |   |  |  | —                                                                               |  



See accompanying notes.



F-7









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas



Consolidated statements of cash flows

Years ended June 30, 2018, 2017 and 2016

(In thousands of reais)





|                                                                                              |  | Notes     |  |  | 2018 |          |   | 2017 |  |          | 2016 | 
|--------------------------------------------------------------------------------------------- |  | --------- |  |  | ---- | -------- | - | ---- |  | -------- | ---- | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|CASH FLOW FROM OPERATING ACTIVITIES                                                           |  |           |  |  |      |          |   |      |  |          |      | 
|Net profit for the year                                                                       |  |           |  |  |      | 126,338  |   |      |  | 27,310   |      | 
|Adjustments to reconcile profit for the year                                                  |  |           |  |  |      |          |   |      |  |          |      | 
|Depreciation and amortization                                                                 |  | 20        |  |  |      | 23,222   |   |      |  | 15,027   |      | 
|Gain from changes in fair value of assets due to spin-off                                     |  | 1.1       |  |  |      | (5,098   | ) |      |  | —        |      | 
|Gain on sale of farm                                                                          |  | 19.b      |  |  |      | (39,817  | ) |      |  | (26,716  | )    | 
|Currency translation adjustment of joint venture spin-off                                     |  | 17.e / 22 |  |  |      | (30,616  | ) |      |  | —        |      | 
|Residual value of property, plant and equipment and intangible assets disposed                |  |           |  |  |      | 433      |   |      |  | 1,896    |      | 
|Write-off of capitalized costs in investment properties                                       |  |           |  |  |      | 10,793   |   |      |  | 8,246    |      | 
|Share of profit (loss) of a joint venture                                                     |  | 11.a      |  |  |      | (14,671  | ) |      |  | 4,425    |      | 
|Unrealized (gain) loss on derivatives, net                                                    |  | 23        |  |  |      | (1,772   | ) |      |  | (1,513   | )    | 
|Unrealized foreign exchange loss (gain), monetary variation and financial charges, net        |  |           |  |  |      | 12,191   |   |      |  | (8,546   | )    | 
|Gain on remeasurement of receivable from sale of farms, net                                   |  | 23        |  |  |      | (12,721  | ) |      |  | (8,029   | )    | 
|Share-based incentive plan – ILPA                                                             |  |           |  |  |      | 844      |   |      |  | —        |      | 
|Deferred income and social contribution taxes                                                 |  | 16.2      |  |  |      | 21,044   |   |      |  | 1,814    |      | 
|Loss (Gain) arising from changes in fair value of biological assets and agricultural products |  | 9         |  |  |      | (99,083  | ) |      |  | (12,266  | )    | 
|Adjustments to net realizable value of agriculutural products                                 |  | 8.1       |  |  |      | (883     | ) |      |  | 1,655    |      | 
|Allowance for doubtful accounts                                                               |  | 20        |  |  |      | (133     | ) |      |  | (516     | )    | 
|Provision (Reversal of provision)for legal claims                                             |  | 25        |  |  |      | (387     | ) |      |  | 139      |      | 
|Discount on the payment of Alto Taquari farm                                                  |  |           |  |  |      | —        |   |      |  | —        |      | 
|                                                                                              |  |           |  |  |      | (10,316  | ) |      |  | 2,926    |      | 
|Changes in working capital                                                                    |  |           |  |  |      |          |   |      |  |          |      | 
|Trade accounts receivable                                                                     |  |           |  |  |      | (6,746   | ) |      |  | (7,297   | )    | 
|Inventories                                                                                   |  |           |  |  |      | (58,442  | ) |      |  | (6,329   | )    | 
|Biological assets                                                                             |  |           |  |  |      | 60,312   |   |      |  | 5,576    |      | 
|Recoverable taxes                                                                             |  |           |  |  |      | 1,943    |   |      |  | 2,754    |      | 
|Derivative financial instruments                                                              |  |           |  |  |      | (16,982  | ) |      |  | 18,996   |      | 
|Other receivables                                                                             |  |           |  |  |      | (2,356   | ) |      |  | 3,779    |      | 
|Trade accounts payable                                                                        |  |           |  |  |      | 11,178   |   |      |  | 24,996   |      | 
|Related parties                                                                               |  |           |  |  |      | (2,338   | ) |      |  | 16,714   |      | 
|Taxes payable                                                                                 |  |           |  |  |      | 1,718    |   |      |  | (2,769   | )    | 
|Income tax and social contribution                                                            |  |           |  |  |      | 1,323    |   |      |  | (970     | )    | 
|Salaries and payroll                                                                          |  |           |  |  |      | 2,787    |   |      |  | 2,657    |      | 
|Advances from customers                                                                       |  |           |  |  |      | 15,540   |   |      |  | 5,353    |      | 
|Other liabilities                                                                             |  |           |  |  |      | 115      |   |      |  | (1,335   | )    | 
|Net cash flows  from (used in) operating activities                                           |  |           |  |  |      | (2,264   | ) |      |  | 65,051   |      | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|CASH FLOW FROM  INVESTING ACTIVITIES                                                          |  |           |  |  |      |          |   |      |  |          |      | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|Addition to property, plant and equipment and intangible assets                               |  |           |  |  |      | (43,105  | ) |      |  | (25,478  | )    | 
|Addition on  investment properties                                                            |  |           |  |  |      | (23,861  | ) |      |  | (119,150 | )    | 
|Redemption of  (Investment in) marketable securities                                          |  |           |  |  |      | (4,001   | ) |      |  | 125,090  |      | 
|Cash received from sales of farms and assets                                                  |  | 7.1.e     |  |  |      | 5,267    |   |      |  | 6,011    |      | 
|Net cash flows from (used in) investing activities                                            |  |           |  |  |      | (65,700  | ) |      |  | (13,527  | )    | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|CASH FLOW FROM  FINANCING ACTIVITIES                                                          |  |           |  |  |      |          |   |      |  |          |      | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|Payments of installments of financed acquisition of farm                                      |  | 13        |  |  |      | (15,559  | ) |      |  | —        |      | 
|Proceeds from loans, financing and debentures                                                 |  | 15        |  |  |      | 270,310  |   |      |  | 39,469   |      | 
|Interest paid on loans, financing and debentures                                              |  | 15        |  |  |      | (10,347  | ) |      |  | (6,327   | )    | 
|Payment of loans and financing                                                                |  | 15        |  |  |      | (105,408 | ) |      |  | (48,308  | )    | 
|Treasury stock acquired                                                                       |  |           |  |  |      | (610     | ) |      |  | (14,721  | )    | 
|Proceeds from the exercise of granted stock                                                   |  |           |  |  |      | —        |   |      |  | —        |      | 
|Dividends paid                                                                                |  | 17.d      |  |  |      | (12,972  | ) |      |  | (32,043  | )    | 
|Net cash flows from (used in)  financing activities                                           |  |           |  |  |      | 125,414  |   |      |  | (61,930  | )    | 
|Increase (decrease) in cash and cash equivalents                                              |  |           |  |  |      | 57,450   |   |      |  | (10,406  | )    | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|Effect of exchange rate variation on cash and cash equivalents                                |  |           |  |  |      | 3,066    |   |      |  | —        |      | 
|                                                                                              |  |           |  |  |      |          |   |      |  |          |      | 
|Cash and cash equivalents at beginning of year                                                |  | 5.1       |  |  |      | 43,798   |   |      |  | 54,204   |      | 
|Cash and cash equivalents at end of year                                                      |  | 5.1       |  |  |      | 104,314  |   |      |  | 43,798   |      | 
|                                                                                              |  |           |  |  |      | 60,516   |   |      |  | (10,406  | )    | 

See accompanying notes.



F-8









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the
Consolidated financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





| | 1. | Operations
| | -- | ----------



BrasilAgro Companhia Brasileira
de Propriedades Agrícolas (“BrasilAgro”) was incorporated on September 23, 2005 and is headquartered at Avenida
Brigadeiro Faria Lima, 1309, in São Paulo with branches in the states of Bahia, Goiás, Mato Grosso, Minas Gerais,
Maranhão and Piauí, and in Paraguay, in the state of Boquerón.



The Company holds interest in
other companies (“subsidiaries), as mentioned in Note 2.1, and its corporate purpose includes:



| | ● | agriculture, cattle raising and forestry
activities of any type and nature and rendering directly or indirectly related services;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | ● | the import and export of agricultural products
and inputs and those related to cattle raising activity;
| | - | -------------------------------------------------------------------------------------------------------



| | ● | the purchase, sale and/or rental of properties,
land, buildings and real estate in rural and/or urban areas;
| | - | ------------------------------------------------------------------------------------------------------------



| | ● | real estate brokerage involving any type
of operations;
| | - | -------------------------------------------------------



| | ● | holding interest, as a member, in other companies
and commercial ventures of any nature, in Brazil and/or abroad, directly or indirectly, related to the purposes described herein;
and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | management of its own and third-party assets.
| | - | ---------------------------------------------



The Company and its subsidiaries
(collectively, the “Company”) have ten (10) farms in six (6) Brazilian states and one (1) joint-venture farm in Paraguay,
with a total area of 198,158 hectares of own lands and 26,763 hectares of leased lands.



1.1
Spin-off of Joint Venture Cresca S.A.



On October
5, 2016, the Company entered into an agreement with Carlos Casado S.A., the sole partner of the Company in the Joint Venture Cresca
S.A., each with 50% interest in the share capital, by which the partners undertook to sell to third parties all the assets and
liabilities that meet the definition of business or divide them into equivalent parts, including rural properties, within an agreed-upon
period.



Since the sale to third parties
was not consummated within the contractually defined period, the parties agreed on splitting off Cresca’s assets and liabilities.
The procedures required for splitting Cresca’s assets and liabilities had to follow a timetable established by the parties,
which had to be concluded on the second quarter of 2017. Through June 30, 2017, certain assets, such as cattle and inventories,
and agreements (including labor) were divided and transferred to Palmeiras, a wholly-owned subsidiary of the Company located in
Paraguay. However, the remaning assets and liabilities, including agricultural properties and financial debts with shareholders,
remained under the exclusive ownership and/or responsibility of Cresca.



On February 9, 2018, the spin-off
of Cresca was concluded; the portion of assets and liabilities attributed to the Company was transferred to the wholly-owned subsidiary
Agropecuária Moroti S.A.



As a result of this transaction,
the Company has the following two subsidiaries that received Cresca’s assets and liabilities:



- Palmeiras S.A. (“Palmeiras”)
– On December 16, 2016, Palmeiras was incorporated in Asunción, the capital city of Paraguay, with partners Jaborandi
Agrícola Ltda. holding 1% of the shares and BrasilAgro holding 99% of the shares. Palmeiras was incorporated with the objective
to operate the activities of the Company’s investment in Cresca S.A. (“Cresca”).



- Agropecuária Moroti
S.A. (“Moroti”) – Subsidiary that received on February 9, 2018, upon conclusion of the formal spin-off process,
all other assets and liabilities of Cresca attributed to BrasilAgro, including land and debts.



F-9







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)



As part of the spin-off, the
Company and Carlos Casado, partners in the joint venture, decided to waive the interest for late payment on the intercompany loans
taken by Cresca S.A. in the total amount of R$32,962, of which BrasilAgro’s share was R$16,563 (Note 23).



After the conclusion of the
spin-off, considering that the Company obtained control of the assets and liabilities that were earlier jointly controlled, as
required by IFRS 3 – Business Combinations, the assets acquired and liabilities acquired were remeasured at the fair value
on the date of acquisition.



The estimated fair value of
the assets and liabilities transferred to Moroti on February 9, 2018 is shown below:



|                                                       |  | Book value |         |  | Effect of fair value measurement |  |        | Fair value | 
|------------------------------------------------------ |  | ---------- | ------- |  | -------------------------------- |  | ------ | ---------- | 
|Assets                                                 |  |            | 134,446 |  |                                  |  | 11,502 |            | 
|Accounts receivable, inventories and other receivables |  |            | 4,616   |  |                                  |  | 36     |            | 
|Recoverable taxes                                      |  |            | 13      |  |                                  |  | (13    | )          | 
|Investment properties                                  |  |            | 129,750 |  |                                  |  | 11,202 |            | 
|Other property and equipment other than land           |  |            | 67      |  |                                  |  | 277    |            | 
|                                                       |  |            |         |  |                                  |  |        |            | 
|Liabilities                                            |  |            | 18,968  |  |                                  |  | 6,404  |            | 
|Trade payables, taxes and other liabilities            |  |            | 254     |  |                                  |  | 6,322  |            | 
|Loans                                                  |  |            | 18,714  |  |                                  |  | 82     |            | 
|Fair value of net spun-off assets                      |  |            | 115,478 |  |                                  |  | 5,098  |            | 



The Company recorded a gain
of R$5,098 for the difference between the carrying value of the interest in the jointly controlled investment of R$115,478 and
the fair value of the assets and liabilities contributed to Moroti of R$120,576 (Note 22).The fair value of assets and liabilities
was determined based on preliminary estimates and concluded on June 30, 2018. No adjustment to the amounts recorded preliminarly
was recorded upon conclusion.



In addition, the Company reclassified
the accumulated currency translation adjustment on the jointly controlled inverstment from comprehensive income to the statement
of income for an amount of R$30,616, under “Other Operating income (expenses), net” (Note 22).



1.2.
Araucaria Farm



On March 27, 2017, the Company
sold a 274-hectare area (200 arable hectares) of the Araucária Farm for 1,000 soybean bags per usable hectare or R$12,451.
The Company received a down payment of 39,254 soybean bags in the amount of R$2,124 and the balance will be received in four annual
installments (Note 7.1.e – Araucária III).



On
May 22, 2017, the Company sold a 1,360-hectare area (918 hectares of arable land) of the Araucária Farm, for 280 soybean
bags per usable hectare or R$16,987 (Note 7.1.e – Araucária IV). The Company received a down payment of 50,148 soybean
bags in the amount of R$3,008 and the balance will be received in five annual installments. The accounting impacts on results are
shown in Note 19.b.



On
May 3, 2018, the Company sold a 956 hectares area (660 hectares of arable land) of the Araucária Farm. The area was sold
for 1,208 soybean bags per usable hectare or R$66,224 par value. The Company received a down payment of 79,200 soybean bags in
the amount of R$5,267, a second installment corresponding to the same number of soybean bags to be received on September 1, 2018
and the balance to be settled in six annual installments (Note 7.1.e – Araucária V). The accounting impact on profit
or loss is described in Note 19.b.



1.3 Sale of Cremaq Farm



On May 19, 2015, the subsidiary
Imobiliária Cremaq Ltda. entered into a purchase and sale agreement for the Cremaq Farm. However, as the contractual condition
to obtain a licence for an additional area was still pending, a portion of the gain on sales was not recognized. In March 2017,
the Company obtained such licence and recognized a gain on sales as disclosed in Notes 14 and 19.b.





F-10











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





At June 30, 2017, the amount
of R$49,703 of the selling price received, wich use was restricted, was fully released upon the compliance of all condition precedent
related to the original sale agreement.



1.4 Sale of Jatobá Farm



At June 30, 2017, the Company
completed the sale of a 625-hectare area (500 agricultural hectares) of Jatobá Farm. The area was sold for 300 soybean bags
per usable hectare or R$10,145. The Company received a down payment of 15,000 soybean bags in the amount of R$878, a second installment
of the same amount on July 30, 2017, and the remaining balance will be settled in four annual installments (Note 7.1.e –
Jatobá I). The accounting impacts on results are shown in Note 19.b.



1.5 Acquisition and agricultural
partnership in property in Maranhão



On February 7, 2017, the Company,
through its subsidiary Imobiliária Ceibo, entered into a Purchase Agreement for the acquisition of a property in the city
of São Raimundo das Mangabeiras in Maranhão (“São José Farm”), with a total of 17,566 hectares
for R$100,000. In addition, the Company incurred additional acquisition costs (due diligence) totaling R$2,733. As a result the
total transaction price amounted to R$102,733. This acquisition is classified as an investment property in the financial statements,
as disclosed in Note 10.



On the same date, the Company
entered into an Agricultural Partnership agreement (“Partnership IV”) (Note 26.d), which involves an arable and developed
area of 15,000 hectares, most of which is planted with sugarcane. The Agricultural Partnership is for 15 years and may be renewed
for the same term. This agreement meets the definition of a finance lease.



| | 2. | Basis of preparation and presentation
| | -- | -------------------------------------



The significant accounting policies
applied when preparing these financial statements are described below. These policies are being consistently applied in all years
presented, unless otherwise stated.



2.1. Basis of preparation



On October 23, 2018, Brasilagro’s
Executive Board, Board of Directors and Fiscal Council approved the Company’s consolidated financial statements and authorized
their issuance.



The consolidated financial statements
have been prepared and are presented in accordance with International Financial Reporting Standards (IFRS), issued by the International
Accounting Standards Board (IASB). All the references to IFRS in these financial statements correspond to the IFRS as issued
by the IASB.



The consolidated financial statements
have been prepared on the historical cost basis, except where otherwise stated, as described in the summary of significant accounting
policies.



Management has not identified
any significant uncertainty as to the Company’s ability to continue as a going concern in the next 12 months.



The preparation of the financial
statements requires the use of certain critical accounting estimates. It also requires that Management use judgment in the process
of application of the Company’s accounting policies. Those areas requiring a higher level of judgment and with more complexity,
as well as the areas in which assumptions and estimates are significant for the financial statements, are disclosed in Note 3.



Non-financial data included
in these financial statements, such as sales volume, planted and leased area, number of farms, and environment were not examined
by the independent auditors.





F-11













BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)







All monetary amounts in these
financial statements are presented in thousands of Brazilian reais, except where otherwise stated. Some of the totals presented
in these financial statements may not cast due to rounding.



Basis
of consolidation



The
consolidated financial statements comprise the financial statements of Brasilagro and its subsidiaries as of June 30, 2018 and
2017, as described bellow:



|                                |  | Ownership % |      
|------------------------------- |  | ----------- | -----
|                                |  | 2018        |      
|Jaborandi Agrícola Ltda         |  |             | 99.99
|Imobiliária Jaborandi           |  |             | 99.99
|Cremaq                          |  |             | 99.99
|Engenho de Maracaju             |  |             | 99.99
|Araucária                       |  |             | 99.99
|Mogno                           |  |             | 99.99
|Cajueiro                        |  |             | 99.99
|Ceibo                           |  |             | 99.99
|Flamboyant                      |  |             | 99.99
|Palmeiras (a)                   |  |             | 99.99
|Moroti (a)                      |  |             | 99.99
|FIM Guardian Exclusive Fund (b) |  |             | —    



| | (a) | Subsidiary incorporaded during the Cresca spin-off
process, as per Note 1.1.
| | --- | ----------------------------------------------------------------------------



| | (b) | During the year, the Company extinguisned its exclusive
investment fund (FIM Guardian).
| | --- | ---------------------------------------------------------------------------------------



The
subsidiaries are fully consolidated from the date of acquisition and consolidation ceases when the Company loses control. The
financial statements of the subsidiaries are prepared for the same reporting period of Brasilagro, using consistent accounting
policies. All intergroup balances, revenues and expenses are fully eliminated in the consolidated financial statements.



2.2.
Foreign currency translation



| | a) | Functional and presentation currency
| | -- | ------------------------------------



The
Company’s functional and presentation currency is the Brazilian Real (R$). The items included in the financial statements
of the subsidiaries located in Brazil are measured using Brazilian Reais (R$) as their functional currency. The U.S. Dollar is
the functional currency of the joint venture Cresca S.A. (“Cresca”), and subsidiaries Palmeiras S.A. (“Palmeiras”)
and Agropecuária Moroti S.A. (“Moroti”), all headquartered in Paraguay.



| | b) | Transactions and balances in foreign currencies
| | -- | -----------------------------------------------



Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions
or valuations when items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognized in the statement of operations.



| | c) | Foreign operations
| | -- | ------------------



In
the preparation of the consolidated financial statements, the financial statements of Palmeiras, Moroti and Cresca, are translated
into reais as follows: a) balance sheet at the exchange rate at year end and b) statement of income and cash flows, at the average
exchange rate.



The
effects from variations in the foreign exchange rate resulting from the translation of foreing operations are presented in “Currency
translation adjustment of foreign operations” in the statement of comprehensive income and in the statement of changes in
equity.





F-12











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





2.3.
Investment in joint venture



Our
investments in the joint venture Cresca, is recorded under the equity method.



A
joint venture is an agreement whereby the parties sharing joint control are entitled to the net assets of the joint ventures.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about relevant
activities require the unanimous consent of the parties sharing control.



2.4.
Cash and cash equivalents and marketable securities



Cash
and cash equivalents includes cash, bank deposits maturing within 90 days from the transaction date and short-term highly liquid
repurchase agreements for which there are no fines or other restrictions for their immediate redemption. Cash equivalents are
recorded at cost plus earnings accrued up to the balance sheet dates, not exceeding market or realization value.



Marketable securities include
the financial investments provided as guarantee for loans and financing recorded in noncurrent assets based on the maturities of
referred to loans and financing.



Considering
the nature of investments held by the Company, there are no significant differences between their book value and the market value.
Investments are recorded at the original cost plus earnings accrued through the balance sheet date on a pro-rata temporis basis.



Bank
deposit certificates and repo transactions may mature in a term exceeding 90 days, and may have repurchase guarantee contractually
provided by the issuer of the security, allowing the redemption of the securities at their original amount invested plus interest,
with no penalty. These investments are classified as cash equivalents. Investments in deposit certificates that are not eligible
for redemption without penalties are classified as marketable securities.



Certain
debt agreements require the Company to keep marketable securities as a guarantee for the outstanding balances. Such investments
are restricted while held in guarantee. The Company discloses the purchases and sales of such investments as investment activities
in the statement of cash flows.



Fixed-income
investments are intended to maintain the value of the resources held by the Company and not yet allocated to rural activities,
and are governed by a policy approved by the Board of Directors.



The
statement of cash flows in relation to financing and investment activities, include only transactions that have actually impacted
cash and cash equivalents.



2.5.
Financial instruments



2.5.1.
Classification and measurement



The Company
classifies its financial assets and liabilities in the following classes: measured at fair value through profit or loss, loans
and receivables and available for sale.



| | a) | Financial assets and liabilities measured at fair
value through profit or loss
| | -- | ------------------------------------------------------------------------------



Financial
assets and liabilities at fair value through profit or loss comprise financial assets held for trading and financial assets and
liabilities designated upon initial recognition at fair value through profit or loss. A financial asset is classified as held
for trading if: (i) acquired principally for the purpose of selling in the near term (ii) it is a derivative (unless designated
as effective hedging instruments) or, (iii) the measurement at fair value reduces or eliminates inconsistences with the measument
used by the Company’s financial management.





F-13











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





The
Company designates at initial recognition, certain financial assets at fair value through profit or loss. This designation cannot
be changed later. These assets are limited to restricted marketable securities, derivatives and receivables from the sale of farms,
which are included in the Consolidated statement of financial position in “Trade accounts receivable”.



Changes
in fair value related to receivable from the sale of farms designated at fair value through profit or loss are recognized in “Gain
(loss) on remeasurement of receivables from the sale of farms” in “financial income and expenses” (Note 23).



| | b) | Loans and receivables
| | -- | ---------------------



The
category includes loans granted and receivables which are non-derivative financial assets with fixed or determinable payments,
not quoted in an active market. They are included in current assets, except for those with maturities exceeding 12 months after
the balance sheet date, which are classified as non-current assets. The Company’s loans and receivables is comprised of trade
receivables, other receivables, and marketable securities given in guarantee on loans and financing and transaction with related
parties. Loans and receivables are recorded at amortized cost, using the effective interest rate method. Interest income is included
in the caption financial income in the statement of operations.



| | c) | Available for sale financial assets
| | -- | -----------------------------------



Available for
sale financial assets are those non-derivative instruments which are not classified as (a) loans and receivables, (b) investments
held to maturity (c) financial assets at fair value through profit or loss. These financial assets include equity instruments
and debt securities. Debt securities in this category are those intended to be held for an indefinite period and which may be
sold to meet liquidity needs or as response to the changes in market conditions.



After
initial recognition, available-for-sale financial assets are measured at fair value, with unrealized gains and losses directly
recognized in the available-for-sale reserve in other comprehensive income until the investment is derecognized. Impairment losses,
interest income and gains or losses on foreign exchange on monetary assets are recognized in profit or loss for the year.



When
the investment is derecognized or when there is an impairment loss, the cumulative gains or losses previously recognized in other
comprehensive income (loss) shall be recognized in profit or loss for the year.



| | d) | Financial liabilities at amortized cost
| | -- | ---------------------------------------



The
Company recognizes bonds issued and subordinated liabilities initially on the date when they are originated. Financial liabilities
are initially recognized at fair value plus transaction costs. After initial recognition, these financial liabilities are measured
at amortized cost through the effective interest rate method. The amortization of the effective interest rate method is included
in the financial expenses caption in the statement of income. The Company’s financial liabilities mainly include trade accounts
payable, loans and financing, debentures, financial leases and accounts payable from acquisitions of farms.



2.5.2.
Recognition



Regular purchases and sales
of financial assets are recognized on the trade date – the date on which the Company commits to purchase or sell the asset.
Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets are written-off when the rights to receive cash flow from investments have expired or have been
transferred; in the latter case, provided the Company has transferred, significantly, all risks and benefits of ownership.





F-14











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





2.5.3
Impairment of financial assets



The
Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are recognized only if
there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the
asset (a “loss event”), that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets and it can be reliably estimated.



The
criteria that the Company uses to determine if there is objective evidence of an impairment loss include:



| | (i) | significant financial difficulty of the issuer or debtor;
| | --- | ---------------------------------------------------------



| | (ii) | a breach of contract, such as a default or delinquency
in interest or principal payments;
| | ---- | -----------------------------------------------------------------------------------------



| | (iii) | the Company, for economic or legal reasons relating
to the borrower’s financial difficulty, grants to the borrower a concession that the lender would not otherwise consider;
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | it becomes probable that the borrower will go bankrupt
or undergo any other financial reorganization;
| | ---- | -----------------------------------------------------------------------------------------------------



| | (v) | the disappearance of an active market for that financial
asset because of financial difficulties; or
| | --- | ----------------------------------------------------------------------------------------------------



| | (vi) | observable data indicating that there is a measurable
decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets,
although the decrease cannot be yet identified with the individual financial assets in the portfolio, including:
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | adverse changes in the payment status of borrowers
in the portfolio; and
| | - | ------------------------------------------------------------------------



| | ● | national or local economic conditions that correlate
to defaults on the assets in the portfolio.
| | - | ------------------------------------------------------------------------------------------------



The
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement
of operations. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract. As a practical expedient, the Company may measure impairment
based on an instrument’s fair value using an observable market price.



If, in a subsequent period,
the amount of the impairment loss decreases and can be related objectively to an event occurring after the impairment was recognized
(such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized
in the statement of operations.



2.6. Derivative financial instruments



Derivative
financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently
re-measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument. Although the Company uses derivative financial instruments for economic hedge purposes, it has not applied
hedge accounting.



Any
gains or losses arising from changes in the fair value of derivatives during the year are recognized immediately in the statement
of income (Note 23). The fair value of derivative financial instruments is disclosed in Note 6.



2.7. Trade receivables



Trade
receivables are amounts due from customers for merchandise and farms sold in the ordinary course of business. If collection is
expected in one year or less, trade receivables are classified as current assets, otherwise, they are presented as non-current
assets.



Trade
receivables not related to the sale of farms are initially recognized at fair value, and subsequently, measured at amortized cost
under the effective interest rate method, less an allowance for doubtful accounts, as appropriate.





F-15









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)



Trade
receivables related to the sale of farms for which the amount of cash receivable is contractually determined in Reais, equivalent
to a quantity of soybean bags, are designated at fair value through profit or loss upon initial recognition. The amount of the
receivable is subsequently remeasured at each balance sheet date by applying to the contractual committeed quantity of sacks of
soybean by the quotation of soybean for future delivery at the maturity date of each installment (or based on estimates and
quotations of brokers when there is no quotation of soybean for future delivery on a specific maturity date) and by translating
the resulting U.S. dollars amount to Reais using the U.S. dollar exchange rate for future delivery on the same maturity date (considering
that future soybean quotations are denominated in US$) and finally discounting the resulting amount to present value. The gain
(loss) on remeasurement of the receivable is recognized in Financial income and expenses under “Gain (loss) on remeasurement
of receivables from sale of farms” (Note 23).



2.8.
Inventories



Agricultural
products from biological assets are measured at fair value when they are ready to be harvested, less selling expenses, when they
are reclassified from biological assets to inventories.



Seeds,
manures, fertilizers, pesticides, fuel, lubricants, warehouse and sundry materials are measured at average acquisition cost.



Upon
identification of the loss of quality of products which affect their sales (either due to storage, load, transportation and other
events related to the operation), these products are counted and physically segregated.In addition, an internal process to record,
approve, dispose of or allocate inventories, is initiated through the approval of the responsible officers duly formalized in
the Company’s management system.



An
adjustment to net realizable value of agricultural products is recognized when the fair value recorded in inventories is
higher than the net realizable value. Net realizable value is the estimated selling price in the ordinary course of business,
less estimated costs to sell. Adjustments to net realizable value are recognized in the statement of income in “Adjustment
to net realizable value of agricultural products after harvest”.



2.9.
Biological assets



The
Company’s and its subsidiaries’ biological assets consist mainly of the cultivation of soybean, corn, sorghum, sugarcane
and beef cattle, which are measured at fair value less costs to sell.



| | (a) | Agricultural activity
| | --- | ---------------------



The
fair value of biological assets is determined upon their initial recognition and at each subsequent balance sheet date. Gains
and losses arising from the changes in fair value of biological assets is determined as the difference between fair value and
the costs incurred in the plantation and treatment of crops of biological assets and agricultural products at the balance sheet
date, and are recorded in the statement of income in “Changes in fair value of biological assets”. In certain circumstances,
the estimated fair value less cost to sell approximate cost incurred at that moment, especially when only a minor biological transformation
has taken place or when no material impact is expected from that biological transformation on the price. Biological assets continue
to be recorded at their fair value.



The
sugarcane crops productive cycle is five years on average, and for a new cycle to start depends on the completion of the previous
cycle. In this regard, the current cycle is classified as biological asset in current assets, and the amount of the constitution
of the bearer plant (bearer of the other cycles) are classified as permanent culture in property, plant and equipment . The calculation
methodology used to estimate the fair value of the biological asset “sugarcane” was the discounted cash flows at a
rate reflecting the risks and the terms of the operation. As such, the Company projected the future cash flows in accordance with
the projected productivity cycle, taking into consideration the estimated useful life of each area, the prices of Total Sugar
Recoverable (“ATR”), estimated productivity and the related estimated costs of production, including the cost of land,
harvest, loading and transportation for each hectare planted.





F-16









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





The
soybean, corn and sorghum are temporary cultures, in which the agricultural product is harvested after a period of time spanning
from 110 to 180 days after the planting date, depending on the cultivation, variety, geographic location and climate conditions.
The calculation methodology used to estimate the fair value of the grains was the discounted cash flows at a rate reflecting the
risk and terms of operations. As such, we projected the future cash flows taking into consideration the estimated productivity,
costs to be incurred based on the Company’s budget or on new internal estimates and market prices. The commodities’prices
available in futures markets, were obtained from quotes on the following boards of trade: CBOT (“Chicago Board of Trade”),
B3 (Bolsa, Brasil, Balcão), and NYBOT (“New York Board of Trade”). For the agricultural products not quoted in
these of markets, we used the prices obtained through direct market surveys or disclosed by specialized companies. We considered
the related logistic expenses and tax discounts in order to arrive at the prices of each of these products in each production
unit of the Company.



As
mentioned above, the fair value of the biological assets disclosed in the balance sheet was determined using valuation techniques
– the discounted cash flows method. The data used in these methods is based on the information observed in the market, whenever
possible, and if unavailable, a certain level of judgment is required to establish such fair value. Judgment is used to determine
the data to be used, e.g. price, productivity and production cost. Changes in the assumptions on these inputs might affect the
fair value of biological assets.



There
were no changes in the valuation methodology used to estimate the fair value of the biological assets.



| | (b) | Cattle raising activity
| | --- | -----------------------



On
June 14, 2016, the Company started raising cattle, which typically consists of producing and selling beef calves after weaning,
which characterizes the activity as breeding.



For
segregation purposes, when applicable, the Company classifies its cattle herd into: cattle (current assets), which can be sold
as a biological asset for meat production; and breeding cattle (non-current assets), which is used in farm operations to generate
other biological assets. Up to the reporting date the Company only had cattle, which includes calves, heifers, cows and bulls.



The
fair value of beef cattle is determined based on market prices, given the existence of an active market. Gain or loss from changes
in the fair value of beef cattle is recognized in profit or loss for the period (Note 9). The Company considered the prices in
the cattle market in Bahia state, considered the principal market, and the metrics used in the market. Accordingly, beef and breeding
cattle are measured based on weight and the age bracket of animals.



2.10.
Investment properties



The
Company’s business strategy aims mainly at the acquisition, development, exploration and sale of rural properties where agricultural
activities can be developed. The Company acquires rural properties believed to have significant potential of appreciation in value
by means of maintenance of assets and development of profitable agricultural activities. By acquiring rural properties, the Company
seeks to implement higher value added crops and transform these rural properties with investments in infrastructure and technology,
in addition to entering into lease contracts with third parties. Based on this strategy, whenever the Company considers that its
rural properties are profitable, it sells these rural properties to realize capital gains.



The
land of rural properties purchased by the Company is measured at acquisition cost, which does not exceed its net realizable value,
and is presented in “Non-current assets”. The fair value of each property is disclosed in Note 10.





F-17











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





Buildings,
improvements and opening of areas in investment properties are measured at historical cost, less accumulated depreciation,
following the same criteria described for property, plant and equipment in Note 2.11.



2.11.
Property, plant and equipment



Property,
plant and equipment is measured at historical cost less accumulated depreciation. Historical cost includes expenditures directly
attributable to the acquisition of the items. Historical cost also includes borrowing costs related to the acquisition of qualifying
assets.



Subsequent
costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the item can be reliably measured.
All other repair and maintenance costs are recognized in profit or loss, as incurred.



Depreciation
is calculated using the straight-line method over their estimated useful lives, at the depreciation rates described below:







|Annual
    depreciation rates %     |      
|----------------------------------- | -----
|                                    |      
|Buildings and improvements          | 2-20 
|Equipment and facilities            | 10   
|Vehicles and agricultural machinery | 13-20
|Furniture and fixtures              | 10   
|Opening of areas                    | 10-20
|Permanent cultures                  | 16-27





The
residual amount and useful lives of property, plant and equipment are revised and adjusted, if appropriate, at the end of each
year.



An
asset carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount exceeds its estimated
recoverable amount.



Gains
and losses on disposals are determined by comparing the sale price with the carrying amount and are recognized in “Other
operating income (expenses), net” in the statement of income.



2.12.
Intangible assets



Intangible
assets includes software license and acquired contractual rights and are amortized over their estimated useful life of 5 years.



Costs
associated with software maintenance are recognized as an expense as incurred.



The
Company has no intangible assets with indefinite useful life.



2.13.
Impairment of non-financial assets



Pursuant
to IAS 36 – Impairment of Assets, assets with finite useful lives are reviewed for impairment indicators on each balance
sheet date and whenever events or changes in circumstances indicate that the book value may not be recoverable. If any indication
exists, the assets are tested for impairment. An impairment loss is recognized for the difference between the asset’s carrying
amount and its recoverable amount.



On
June 30, 2018 and 2017, no indication of impairment of assets was identified.





F-18











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)







2.14.
Trade accounts payables



Trade
account payables are obligations to pay for goods or services acquired from suppliers in the ordinary course of business. Trade
accounts payables are classified as current liabilities if payment is due within one year or less, otherwise they are classified
as non-current liabilities.



2.15.
Loans, financing and debentures



Loans, financing and debentures
are recognized initially at fair value, net of transaction costs incurred, and subsequently carried at amortized cost. Any difference
between the procceds (net of transaction costs) and the settlement value is recognized in the statement of income over the agreement
period using the effective interest rate method.



Fees
paid in raising credit facilities are recognized as transaction costs to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquididation services
and amortized over the period of the facility to which it relates.



Loans,
financing and debentures are classified as current liabilities unless the Company has an unconditional right to defer settlement
of the liability for at least 12 months or longer after the balance sheet date.



2.16.
Provisions



Provisions
are recognized when the Company has a present, legal or constructive obligation as a result of past events and it is probable
that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.



Contingent
liabilities arising from labor, social security, tax, environmental, contractual, operating obligations and administrative and
judicial claims are recorded at their estimated amount when the likelihood of loss in considered probable (Note 3.a).



2.17.
Current and deferred income tax and social contribution



| | (a) | Current income tax and social contribution
| | --- | ------------------------------------------



Current
income tax and social contribution are calculated applying a rate of 15%, plus surtax of 10% on taxable profit exceeding R$240 per
annum for income tax, and 9% on taxable profit for social contribution on net profit. Income tax and social contribution loss
carryforwards can be used to offset the payment of income tax and social contribution tax payable limited to 30% of annual taxable
profit, except for the rural activity which may reach 100% of annual taxable profit. Tax loss carryforwards do not expire. As
allowed by the Brazilian tax legislation, certain subsidiaries opted for a tax regime under which taxable profit is computed as
a percentage of revenues. Under this regime, taxable profit for income and social contribution tax is calculated by applying a
rate of 8% and 12% on gross revenue, respectively, on which the statutory rates for income and social contribution tax are applied.



| | (b) | Deferred income tax and social contribution
| | --- | -------------------------------------------



Deferred
income taxes are recognized for temporary differences between the tax base of assets and liabilities and their carrying amounts
for financial reporting purposes at the reporting date. A deferred income tax liability is recognized for all the temporary differences,
whereas deferred income tax assets are only recognized to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilized, including the recognition of a deferred tax asset related to unused tax
loss carryforwards. Deferred tax assets and liabilities are classified as non-current. Income tax related to items directly recognized
in equity are also recognized in equity.





F-19









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)



Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in the year whae the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Suh rates are 25% for income tax and 9% for social contribution tax (Notes 16).



2.18.
Employee benefits



| | a) | Share-based payments
| | -- | --------------------



The
Company operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees
as consideration for equity instruments (options and shares) of the Company.



The
cost of transactions settled with shares is recognized as expense for the year, jointly with a corresponding increase in equity
during the year in which the conditions of performance and/or provision of services are met. The accumulated expenses recognized
in connection with the equity instruments on each base date, until the date of acquisition, reflect the extent to which the acquisition
period has expired and the best estimate of the Company and its subsidiaries as to the number of equity instruments to be acquired.



The
expense or reversal of expenses for each year represents the changes in accumulated expenses recognized in the beginning and end
of the year. Expenses related to services that did not complete their acquisition period are not recognized, except for transactions
settled with shares in which the acquisition depends on a market condition or on the non-acquisition of rights, which are treated
as acquired, irrespective of whether the market condition or the condition of non-acquisition of rights is fulfilled or not, provided
that all other conditions of performance and/or provision of services are met.



When
an equity instrument is modified, the minimum expense recognized is the expense that would have been incurred if the terms had
not been modified. An additional expense is recognized in case of modification that raises the total fair value of the transaction
paid for with shares or that otherwise benefits the employee, as measured on the date of modification.



If
an equity instrument is canceled, such instrument is treated as if it was fully acquired on the date of cancellation, and any
expenses not yet recognized, relating to the premium, are recognized immediately in the profit or loss of the year.



This
includes any premium whose non-acquisition conditions under the control of the Company or the employee are not met. However, if
the canceled plan is replaced by a new plan and substitute grants are generated, on the date it is granted, the canceled grant
and the new plan will be treated as a modification of the original grant, as described in the previous paragraph. All cancellations
of transactions with share-based payments will be treated the same.



| | b) | Profit sharing
| | -- | --------------



The
Company provides employees a profit-sharing program, under which all of the employees have the right to receive annual bonuses
based on the Company’s consolidated financial and operational results, and also on personal goals set for individual employees.
Profit sharing is usually recognized at year end, when the amount can be reliably measured by the Company.





F-20









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





2.19.
Capital



Common
shares are recorded in equity. Incremental costs directly attributable to issue new shares or options are shown in equity as a
deduction of the issued amount, net of taxes.



2.20.
Revenue recognition



Revenue
comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s
activities, including leases. Revenue is presented net of taxes, returns and discounts.



The
Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to the entity and when specific criteria have been met for each of the Company’s activities, as described below. The Company’s
estimates are based on past experience, taking into consideration the type of customer, the type of transaction and transaction
specifics.



| | a) | Sale of goods
| | -- | -------------



Revenue
from grain and sugarcane sales is recognized when the significant risks and benefits of ownership of the goods are transferred
to the purchaser, usually when the products are delivered to the purchaser at the determined location, according to the agreed
sales terms.



In
the case of grains, the Company normally enters into forward contracts under which the Company is entitled to determine the sale
price for the total or partial volume of grains sold, through the delivery date, based on formulas contractually agreed upon. In
some cases, the formulas used to determine the sales price are estated in U.S. Dollars. The Reais amount is also contractually
determined, which is based on the exchange rate applicable a couple of days prior to settling the transaction. The price can also
be adjusted by other factors, such as humidity and other technical characteristics of grains.



Upon
the delivery of grains, revenue is recognized based on the price determined for each client considering the foreign exchange rate
on the delivery date. After the grains are delivered to the client, the quality and final weight areassessed, and the final price
of the transaction is agreed upon, which result in adjusting the original contractual amounts, and any foreign exchange rate variation
through the settlement date.



| | b) | Sale of farms
| | -- | -------------



Gain
on sale of farms is not recognized until (i) the sale is completed, (ii) the Company has determined that it is probable
the buyer will pay, (iii) the amount of revenue can be measured reliably, and (iv)  the Company has transferred all
risks and rewards to the buyer, and does not have a continuing involvement. The result from sales of farms is presented in the
statement of operations as “Gain on sale of farms” net of the related cost.



| | c) | Sale of beef cattle
| | -- | -------------------



Revenue
from the sale of beef cattle is recognized when the material risks and the benefits of cattle ownership are transferred to the
buyer, usually when the cattle is delivered to the buyer at the specified place, in accordance with the terms of the sale agreed
upon.



As
for the sale of beef cattle, the company’s operation consists basically of a project involving the production and sale of
beef calves after weaning (this process is called rearing). However, some animals that prove to be infertile may be sold to meat
packers for slaughtering. The pricing for sale of rearing cattle is based on the price of the arroba of fed cattle in the respective
market (the arroba price is verified on the transaction date), the animal weight, plus the premium related to the category. The
sale of animals for slaughtering, in turn, considers the price of the arroba of fed cattle or heifer/cow on the date of sale in
the respective market, applied to carcass yields.





F-21









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





2.21.
Financial income and expenses



Includes
interest and foreing exchange variations arising from loan and financing contracts, marketable securities, trade accounts receivable,
gain (loss) on remeasurement of receivables from sale of farms and machinery, gains and losses for changes in fari value of derivative
financial instruments, as well as discounts obtained from suppliers for the prepayment trade accounts payable.



2.22.
Leases



| | a) | Company as lessee
| | -- | -----------------



The
Company classifies lease of farms as operating leases to the extent that a significant portion of the risks and benefits of the
ownership is held by the lessor and classifies lease of sugarcane crops as financial leases to the extent that a significant portion
of the risks and benefits of ownership is transferred to the lessee. The lease expenses are initially recorded as part of biological
assets and recorded as cost of sales of agricultural products upon the sale. The lease payments are measured based on a future
quotation of soybean and as such, do not have a fixed value, but rather depend on the soybean quotation on a future date, are
considered contingent payments.



| | b) | Company as lessor
| | -- | -----------------



Revenues
from operating lease of land are recognized on a straight line basis over the leasing period. When the lease price is defined
in quantities of agricultural products or livestock, the lease amount is recognized considering the price of the agricultural
product or livestock effective at the balance sheet date or at the date established in the contract, as the case may be. The amounts
received in advance are recognized in current liabilities under the caption “Other liabilities”.



Leasing
arrangements under which a significant portion of the risks and benefits of ownership of the land are retained by the lessor are
classified as operating leases.



2.23.
Distribution of dividends



Distribution
of dividends to the Company’s stockholders are recognized as a liability in the Company’s financial statements at
year-end based on the Company’s articles of incorporation. Any amount that exceeds the minimum legally required is only
approved at the shareholders’ general meeting according to the proposal submitted by the Board of Directors. The tax benefit
of interest on equity is recognized in the statement of operations.



2.24.
Adjustment to present value – assets and liabilities



Assets
and liabilities arising from long-term operations and short-term operations for which the financing component could have a material
effect, are adjusted to present value.



Accordingly,
certain elements of assets and liabilities are adjusted to present value, based on discount rates, which aim to reflect the best
estimates of time value of money.



The
discount rate used varies depending on the characteristics of the assets and liabilities including the risk and terms of the specific
item, and it is based on the average rate of loans and financing obtained by the Company, net of inflationary effects.





F-22









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





2.25.
Basic and diluted earnings per share



Basic
earnings per share is calculated by dividing the available profit by the weighted average number of common shares outstanding
during the year.



Diluted
earnings per share is calculated by dividing the available profit by the weighted average number of common shares outstanding
during the year plus the weighted number of additional shares that would be issued on conversion of all dilutive potential common
shares into common shares, such as stock options and warrants.



2.26.
Statement of cash flows



The
statement of cash flows is prepared and presented in accordance with IAS 7.



Interest
paid is classified as cash flows from financing activities since it represents costs for obtaining financial resources, and are
not considered cash flows from operating activities of the Company.



2.27.
New standards, amendments and interpretations



New
or revised pronouncements applied for the first time in the current year



The
Company understands that the amendments and revisions of the rules issued by the International Accounting Standards Board (IASB),
to be mandatorily adopted for the first time in the current fiscal year, did not produce significant impacts on its financial
statements.



Amendments
to IAS 7 Statement of Cash Flows: Disclosure Initiative



The
amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including
both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Company has provided
the information for both the current and the comparative period in Note 2.4.



Amendments
to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealized Losses



The
amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it
may make deductions on the reversal of deductible temporary difference related to unrealized losses. Furthermore, the amendments
provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit
may include the recovery of some assets for more than their carrying amount. The Company applied amendments retrospectively. However,
their application has no effect on the Company’s financial position and performance as the Company has no deductible temporary
differences or assets that are in the scope of the amendments.



Annual
Improvements Cycle - 2014-2016



Amendments
to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in IFRS 12



The
amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs B10–B16, apply to an entity’s
interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that
is classified (or included in a disposal group that is classified) as held for sale. This amendment has no impact as the Company
does not have any investment classified as held for sale.





F-23











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





Standards
issued but not yet in force as of June 30, 2018



The
Company decided not to the early adopt any standard, interpretation or alteration that has been issued but has not become
effective yet. Since the Company’s fiscal year begins on July 1, the standards to be mandatorily applied as from
January 1, 2018 will be adopted by the Company in the fiscal year beginning July 1, 2018. The nature and effectiveness of
each of the new standards and alterations are described below:



| | a) | IFRS 9 – Financial Instruments
| | -- | ------------------------------



In
July 2014, the IASB issued the final version of IFRS 9 – Financial Instruments, which replaces IAS 39 – Financial
Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 combines the three aspects of the project
for accounting for financial instruments: classification and measurement, asset impairment and hedge accounting. The standard
is applicable for fiscal years beginning on January 1, 2018.



Starting
July 1, 2018, the Company will apply IFRS 9 – Financial Instruments as the basis for recognition, classification and measurement
of financial instruments.



The
main aspects of the new standard applicable to the Company are described below:



| | i. | Classification and measurement of financial assets
| | -- | --------------------------------------------------



IFRS
9 contains a new approach for the classification and measurement of financial assets that reflect the business model under which
assets and their cash flow characteristics are managed. It contains three main categories to classify financial instruments: measured
at amortized cost, at fair value through other comprehensive income, and at fair value through profit or loss. The standard eliminates
the categories existing in IAS 39 of financial instruments held to maturity, loans and receivables and financial instruments available
for sale. This change of nomenclature does not alter how financial instruments are subsequently measured; it only impacts the
disclosure of financial instruments by category in the financial statements, as shown below:



|                                  |  | 6/30/2018    |         |  | Category
|--------------------------------- |  | ------------ | ------- |  | --------
|Financial Instruments             |  | Consolidated |         |  | IAS 39  
|Trade accounts receivable         |  |              | 57,185  |  |         
|Transactions with Related Parties |  |              | 1,660   |  |         
|Trade accounts payable            |  |              | 48,518  |  |         
|Loans and financing               |  |              | 255,805 |  |         



| | ii. | Impairment
| | --- | ----------



The
new standard replaced the “incurred losses” model of IAS 39 for a prospective model of “expected credit losses.”
This will require significant judgment on how changes in economic factors affect expected credit losses. Such provisions will
be measured in credit losses expected for 12 months and credit losses expected for the lifetime of the asset, that is, credit
losses that result from all possible default events throughout the expected life of a financial instrument.



The
Company selected to apply the simplified approach of IFRS 9 – Financial Instruments to measure the credit losses expected
throughout the expected life of the financial instrument.



During
the year, the Company carried out a detailed evaluation of the impact of IFRS 9 aspects. The conclusion of the evaluation is that
there is no relevant impact on the adoption of IFRS 9 on impairment of financial assts due to the fact that the Company already
analyzer each client individualy for expected losses and the level of overdue receivables is not relevant.



F-24







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)



| | b) | IFRS 15 – Revenue from Contracts with Customers
| | -- | -----------------------------------------------



IFRS
15 was issued in May 2014, amended in April 2016 and establishes a five-step model to account for revenues from agreements with
clients. According to IFRS 15, revenue is recognized for a value that reflects the consideration to which an entity expects to
be entitled in exchange for the transfer or goods or services to a client. The new standard on revenue will replace all current
requirements for recognition of revenue in accordance with IFRS.



Starting from July 1, 2018,
the Company will adopt the IFRS 15 – Revenue from Contracts with Customers.



The complete retrospective application
or modified retrospective application of the standard will be required for annual periods starting from January 1, 2018.The Company
plans to adopt the new standard on the required date based on the modified retrospective method.



The new standard provides the
principles to be applied by an entity to determine the measurement of revenue and how and when it must be recognized, based on
five steps: i) identification of the agreements with clients; ii) identification of the performance obligations envisaged in the
agreements; iii) determination of the transaction price; iv) allocation of the transaction price to the performance obligations
envisaged in the agreements; and v) recognition of revenue when the performance obligation is fulfilled.



The changes establish the criteria
for measurement and registration of sales, as they were effectively made with due presentation, as well as registration of the
values to which the Company is entitled in the operation, considering any estimates of impairment loss.



In preparing to adopt IFRS 15,
the Company considered the following:



| | (a) | Sales of agricultural products
| | --- | ------------------------------



For contracts with
customers in which the sale of agricultural prodcuts is generally expected to be the only performance obligation, adoption of
IFRS 15 is not expected to have any impact on the Company’s revenue and profit or loss.



The Company expects the revenue
recognition to occur at a point in time when control of the agricultural products is transferred to the customer, generally on
delivery.



| | (b) | Sales of farms
| | --- | --------------



For sales of land, revenue is
recognized when risks and benefits of ownership of the land is transferred to the customer. This is considered to be the only performance
obligation and therefore, according to IFRS 15, revenue is recognized at a point in time, generally when possession of the land
is granted to the customer.



| | (c) | Presentation and disclosure requirements
| | --- | ----------------------------------------



The presentation and
disclosure requirements in IFRS 15 are more detailed than under current IFRS. The presentation requirements represent a
significant change from current practice and increases the volume of disclosures required in the Company’s financial
statements. As required by IFRS 15, the Company will disaggregate revenue recognized from contracts with customers into
categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic
factors. It will also disclose information about the relationship between the disclosure of disaggregated revenue and revenue
information disclosed for each reportable segment.





F-25











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





The Company and its subsidiaries
analyzed the new standard and identified no relevant impacts on their financial statements, except for a higher level of disclosures,
considering the nature of their sale transactions, in which performance obligations are clear, transaction price definition and
the transfer of control over assets is not complex (it is made to the extent the ownership and benefits are transferred to the
beneficiaries based on defined market prices).



| | c) | IFRS 16 – Leases
| | -- | ----------------



IFRS 16 was issued in January
2016 and replaces IAS 17 – Leases, IFRIC 4 – Determining Whether an Arrangement Contains a Lease, SIC-15 – Operating
leases – Incentives, and SIC-27 – Evaluating the Substance of Transactions in the Legal Form of a Lease. IFRS 16 establishes
the principles for recognition, measurement, presentation and disclosure of leases and requires that lessees book all leases using
a single model in the balance sheet, similar to the accounting of financial leases under IAS 17.



IFRS 16 will be applicable for
annual periods beginning on January 1, 2019.Lessees may choose to adopt the standard using a complete retrospective application
or a modified retrospective application. The temporary provisions of the standard allow certain exemptions.



The Company performed a preliminary
analysis and concluded that the standard should produce impacts on its financial statements. The quantitative analysis of the potential
effect of IFRS 16 on its financial statements will be made during the fiscal year ending on June 30, 2019, considering this standard
will be adopted on July 01, 2019.



| | d) | IFRS 2 Classification and Measurement of Share-based
Payment Transactions — Amendments to IFRS 2
| | -- | ------------------------------------------------------------------------------------------------



The IASB issued amendments to
IFRS 2 Share-based Payment that address three main areas: the effects of vesting conditions on the measurement of a cash-settled
share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding
tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its
classification from cash settled to equity settled.



On adoption, entities are required
to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments
and other criteria are met. The amendments are effective for annual periods beginning on or after January 01, 2018, with early
application permitted. The Company does not expect any impacts on its consolidated financial statements.



| | e) | Transfers of Investment Property — Amendments
to IAS 40
| | -- | -------------------------------------------------------



The amendments clarify when
an entity should transfer property, including property under construction or development into, or out of investment property. The
amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property
and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide
evidence of a change in use. Entities should apply the amendments prospectively to changes in use that occur on or after the beginning
of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of
property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date.



Retrospective application in
accordance with IAS 8 is only permitted if it is possible without the use of hindsight. Effective for annual periods beginning
on or after January 01, 2018. Early application of the amendments is permitted and must be disclosed. The Company will apply amendments
when they become effective. However, since the current practice is in line with the clarifications issued, the Company does not
expect any effect on its consolidated financial statements.





F-26











BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





| | f) | IFRIC Interpretation
22 Foreign Currency Transactions and Advance Consideration
| | -- | -------------------------------------------------------------------------------



The Interpretation clarifies
that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it)
on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction
is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration.
If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or
receipt of advance consideration. Entities may apply the amendments on a fully retrospective basis.



Alternatively, an entity may
apply the Interpretation prospectively to all assets, expenses and income in its scope that are initially recognized on or after:



| | (i) | The beginning of the reporting period in which the entity first applies the interpretation Or
| | --- | ---------------------------------------------------------------------------------------------



| | (ii) | The beginning of a prior reporting period presented as comparative information in the financial
statements of the reporting period in which the entity first applies the interpretation.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Interpretation is effective
for annual periods beginning on or after January 01, 2018. Early application of interpretation is permitted and must be disclosed.
However, since the current practice is in line with the Interpretation, the Company does not expect any effect on its consolidated
financial statements.



| | g) | IFRIC Interpretation 23 Uncertainty over Income Tax Treatment
| | -- | -------------------------------------------------------------



The Interpretation addresses
the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 and does not apply
to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties
associated with uncertain tax treatments.



The Interpretation specifically
addresses the following:



●
Whether an entity considers uncertain tax treatments separately



●
The assumptions an entity makes about the examination of tax treatments by taxation authorities



●
How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates



●
How an entity considers changes in facts and circumstances



An entity must determine whether
to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that
better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods
beginning on or after January 01, 2019, but certain transition reliefs are available. The Company will apply interpretation from
its effective date. The Company is assessing the potential effect of the amendments on its consolidated financial statements.



| | 3. | Significant accounting estimates and judgments
| | -- | ----------------------------------------------



Accounting
estimates and judgments are continuously assessed and based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the current circumstances.



Based
on the assumptions, the Company concerning its future. The resulting accounting estimates will, by definition, seldom equal the
related actual amounts. The estimates and assumptions that have a significant risk of causing a material misstatement to the carrying
amounts of assets and liabilities within the next year are as follows:



| | a) | Contingencies
| | -- | -------------



The
Company is party to different legal and administrative proceedings, as described in Note 25. Provisions are set up for all the
contingencies related to legal claims that are estimated to represent probable losses (present obligations resulting from past
events in which an outflow of resources is probable, and amounts can be reliably estimated). The evaluation of the likelihood
of loss includes the opinion of outside legal advisors.



| | b) | Biological assets
| | -- | -----------------



The
fair value of biological assets recorded in the balance sheet (Note 9) was determined using valuation techniques, including the
discounted cash flows method. The inputs for these estimates are based on those observable in the market, whenever possible, and
when such inputs are not available, a certain level of judgment is required to estimate the fair value. Judgment includes considerations
on data e.g. price, productivity, crop cost and production cost. Changes in the assumptions on these factors might affect the
fair value recognized for biological assets.





F-27









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





An
increase or decrease by 1% in the expected productivity of sugarcane and grains would result in an increase or decrease in biological
asset by R$1,117, and an increase or decrease by 1% in the price of sugarcane and grains would result in an increase or decrease
in biological asset by R$1,623.



With
regard to cattle, the Company values its breeding stock at fair value based on market price for the region.



| | c) | Investment properties
| | -- | ---------------------



The
fair value of investment properties was determined through an appraisal prepared by the Company.



The
appraisal was performed by means of standards adopted in the market considering the characteristics, location, type of soil, climate
of the region, calculation of improvements, presentation of the elements and calculation of the land value, which may differ based
on these variables.



Methodology
used



At
June 30, 2018, investment properties were valued by applying the comparative analysis methodology adjusted by its related features:



| | i) | The valuation relied, among other aspects, on the following
information: (i) location of farms, (ii) total area and its related percentages of opening and use;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | The market value presented for the farm corresponds
to the portion of bare land, for payment in cash, not including machinery, equipment, agricultural inputs, cultivation. The soil
adjustment factor (preparation of land for planting) was considered in the assessment of prices;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | The value of land for agriculture in the surveyed region,
is referenced to the price of soybean bag. The unit amounts of the farms for sale (market researches) were obtained in soybean
bags per hectare. Accordingly, the amount in reais (R$) of the property varies directly due to the variation in the soybean price;
and
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv) | The soybean price considered at the base date of the
work, June 30, 2018, was R$58.91 (West Region – Bahia), R$59.78 (Balsas Region – Maranhão), R$57.18 (Alto Taquari
Region – Mato Grosso) and R$57.18 (Mineiros Region – Goiás). This amount represents an average in amounts arbitrated
by the real estate market of the region due to the great instability in the amount of soybean bag.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There
were no changes in the valuation methodology used to estimate the fair value of the investment properties.



| | d) | Deferred income tax
| | -- | -------------------



The
Company recognizes deferred income tax assets and liabilities, as described in Note 16, on the temporary differences between the
carrying amount and the tax basis of assets and liabilities using statutory rates. The Company regularly assesses if the deferred
income tax assets recognized are recoverable, considering the taxable profit generated in the past as well as the expected future
taxable profit, in accordance with a technical feasibility study performed by the Company.





F-28









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





| | 4. | Financial risk management
| | -- | -------------------------



4.1.
Financial risk factors



The
Company operates with various financial instruments, including cash and cash equivalents, marketable securities, trade accounts
receivables, accounts receivable and others, trade accounts payable, accounts payable for the purchase of farms, loans and financing
and derivative instruments.



Certain
Company’s operations expose it to market risks, mainly in relation to exchange rates, interest rates and changes in the
prices of agricultural commodities. As a result, the Company also enters into derivative financial instruments, used to hedge
its exposures with respect to crops or with respect to assets and liabilities recognized in the balance sheet, depending on the
nature of the specific operation.



Excluding
derivative financial instruments, fair value is basically determined using the discounted cash flow method. The amounts recorded
under current assets and liabilities are either highly liquid or mature within twelve months, as such their carrying value approximates
their fair value.



4.2.
Policies approved by the Board of Directors for the use of financial instruments, including derivatives



The
Company’s policies in respect to transactions with financial instruments, which have been approved by the Board of Directors,
are as follows: (i) Investment Policy which provides guidelines in respect to Company’s investment of cash, considering
the counterparty risk, the nature of instruments and liquidity, among others; (ii) Derivative financial instrument policy
which provides guidelines to manage the Company’s exposures to currency risk, interest rate and index risks, and agricultural
commodities price risk, always linking the derivative financial instrument to the asset or liability that generates the exposure;
and (iii) Risk Policy, which addresses items not covered by the Investment Policy or the Derivative financial instrument
Policy including hedge against future cash flows with respect to future production of commodities.



a)   Cash
and cash equivalents, marketable securities, trade accounts receivable, receivable from sale of farms, loans with related parties
and accounts payable. The amounts recorded approximate their estimated fair value.



b)   Loans,
financing and debentures. The book value of loans, financing and debentures, denominated in reais have its interest rates either
fixed or based on the variation of TJLP (Long Term Interest Rate), SELIC (Special System of Clearance and Custody Rate) and exchange
rate and approximates their fair value. The Executive Officers report the transactions entered into at the Board of Directors’
meetings.



4.3. Analysis of exposure to
financial asset and liability risks



| | a) | Currency risk
| | -- | -------------



This
risk arises from the possibility that the Company may incur losses due to fluctuations in exchange rates, which reduces the nominal
amount of assets or increase the amount of liabilities. This risk also arises with respect to commitments to sell products existing
in inventories or agricultural products not yet harvested when sales are made at prices to be fixed at a future date, prices which
vary depending on the exchange rate.



| | b) | Interest rate and indices risk
| | -- | ------------------------------



This
risk arises from the possibility that the Company may incur losses due to fluctuations in the interest rates or indices which
increase financial expenses related to certain contracts for the acquisition of farms, indexed by inflation, such as the IGP-M
rate (“FGV”).



| | c) | Agricutural commodities price risk
| | -- | ----------------------------------



This
risk arises from the possibility that the Company may incur losses due to fluctuations in the market prices of agricultural products.





F-29













BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)



4.4.
Objectives and strategies of risk management and of use of derivative instruments



The
Executive Board is responsible for managing financial risks, and evaluates the Company’s exposure to foreign currency risk,
interest rate and index risk and agricultural commodities price risk with respect to assets, liabilities and transactions of the
Company. Considering the exposure to such risks, Company management evaluates the convenience, cost and availability in the market
of derivative financial instruments which allow the Company to mitigate such risks. After such assessment, the Executive Board
decides whether to enter into derivative financial instruments within the parameters previously approved in the Policies referred
to above, and reports it in the Board of Directors’ meetings.



4.5.
Risks related to operating strategy



The
use of derivative instruments as an economic hedge reduce the risks of changes in cash flows arising from risks such as foreign
currency, interest rate and price index and agricultural commodities prices, currently soybean and corn.



However
the change in the fair value of the derivative financial instrument may differ from the change in the cash flows or fair value
of the assets, liabilities or forecasted transactions which are being hedged, as a result of different factors, such as, among
others, differences between the contract dates, the maturity and settlement dates, or differences in “spreads” on the
financial assets and liabilities being hedged and the corresponding spreads in the related legs of the swaps. In the case of the
derivative financial instruments strategy to hedge recognized assets and liabilities, management believes that the derivative
financial instruments present a high degree of protection with respect to the changes in the assets and liabilities being hedged.



In the case of the strategy
to hedge forecasted sales of soybean or to hedge accounts payable/receivable, which are susceptible to changes commodity prices,
differences may arise due to additional factors, such as differences between the estimated and actual soybean volume to be harvested,
or differences between the quoted price of soybean in the international markets where the derivative financial instruments are
quoted and the price of soybean in the markets in which soybean is physically delivered/received by the Company. Should the soybean
volume effectively harvested be lower than the amount for which derivative financial instruments were contracted, the Company will
be exposed to variations in the price of the commodities by the volume hedged in excess and vice-versa should the soybean volume
effectively harvested be higher than the hedged volume.



To the extent that the Company
does not set the selling price of soybean through derivative financial instruments, but rather it establishes a range of selling
prices through options, the quantity of US dollars to be received from the sale of soybean to customers and from the settlement
of the options is a range of amounts. Should the notional amount of futures to sell US dollars entered into be lower than the actual
amount of US dollars received, the Company will be exposed to changes in the exchange rate between the U.S. dollar and the Brazilian
real for the amount hedged in excess and vice-versa should the notional amount of futures to sell US dollars entered into be higher
than the actual amount of U.S. dollars received.



4.6.
Controls over the use of derivative financial instruments



Additionally, the Company is
subject to credit risk with respect to the counterparty of the derivative financial instrument. The Company has contracted derivative
financial instruments either traded in on stock exchanges or from prime first-tier financial institutions or “trading”
companies. The Company understands that, at the balance sheet date, there are no indications of collectability risk with respect
to the amounts recognized as assets with respect to derivative financial instruments.



The main controls
established on the use of derivative financial instruments are as follows:



| | ● | establishment of policies defined by the Board of
Directors;
| | - | ------------------------------------------------------------





F-30









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





| | ● | prohibition to enter into derivative financial instruments
that have not been approved by the Executive Officers;
| | - | -----------------------------------------------------------------------------------------------------------------



| | ● | maintenance by the Executive Officers of a centralized
inventory of outstanding derivative financial instruments contracts;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | ● | daily risk report with the consolidated position provided
to a group comprising the Executive Officers and designated members of the Board of Directors;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | monthly monitoring by the Executive Officers of the
fair values as reported by the counterparties as compared to the amounts estimated by management; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
fair value of the derivative financial instruments is estimated based on the market in which they were contracted and also in
which the instruments are inserted.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



4.7.
Impact of derivative instruments on the statement of operation



The
gains and losses for changes in the fair value of derivative financial instruments are recognized in the statement of income separately
between realized profit and loss (corresponding to derivative financial instruments that have already been settled) and unrealized
profit and loss (corresponding to derivative financial instruments not yet settled).



4.8.
Estimate of fair value of derivative financial instruments



The
fair value of derivative financial instruments traded on stock exchanges (B3 and Chicago Board of Trade) is determined based on
the quoted prices at the balance sheet date. To estimate the fair value of derivative financial instruments not traded on stock
exchanges the Company uses quotes for similar instruments or information available in the market and uses valuation methodologies
widely used and that are also used by the counterparties. The estimates do not necessarily guarantee that such operations may
be settled at the estimated amounts. The use of different market information and/or valuation methodologies may have a relevant
effect on the amount of the estimated fair value.



Specific methodologies used
for derivative financial instruments entered into by the Company:



| | ● | Derivative
financial instruments of agricultural commodities - The fair value is obtained by using various market sources, including quotes
provided by international brokers, international banks and available on the Chicago Board of Trade (CBOT).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Derivative
financial instruments of foreign currencies - The fair value is determined based on information obtained from various market sources
including, as appropriate, B3 S.A. – Brasil, Bolsa, Balcão, local banks, in addition to information sent by the operation
counterparty.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) | Sensitivity analysis
| | -- | --------------------



Management
identified for each type of derivative financial instrument the conditions for variation in foreign exchange rates, interest rates
or commodities prices which may generate loss on assets and/or liabilities which is being hedged or, in the case of derivative
financial instruments related to transactions not recorded in the balance sheet, in the fair value of the contracted derivatives.



The
sensitivity analysis aims at measuring the impact from the changes in the market variables on the aforementioned financial instruments
of the Company, considering all other market indicators comprised. Upon their settlement, such amounts may differ from those stated
below, due to the estimates used in their preparation.



This
analysis contemplates 5 distinct scenarios that differ due to the intensity of variation in relation to the current market. At
June 30, 2018, as reference for probable scenarios I, II, III and IV, a variation in relation to the current market of 0%, -25%,
-50%, +25%, +50%, respectively, was considered.





F-31









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated
otherwise)





The
preparation of the probable scenario took into consideration the market prices of each one of the reference assets of derivative
instruments held by the Company at year end. Since all these assets are inserted in competitive and open markets, the current
market price is a satisfactory reference for the expected price of these assets. Accordingly, since the current market price was
the reference for the calculation of both book value of derivatives and the Probable Scenario, the result of the latter one is
the same, because the rates and prices of each operation maturity were used.



The
assumptions and scenarios are as follows:



|                                               |  |                    |          |   |                  |                         |          |                   |                          |  | 2018               |  
|---------------------------------------------- |  | ------------------ | -------- | - | ---------------- | ----------------------- | -------- | ----------------- | ------------------------ |  | ------------------ | -
|                                               |  |                    |          |   |                  | Devaluation in reais R$ |          |                   | Appreciation in reais R$ | 
|                                               |  | Probable 
scenario |          |   | Scenario I 
-25% |                         |          | Scenario II 
-50% |                          |  | Scenario III 
+25% |  
|                                               |  |                    |          |   |                  |                         |          |                   |                          |  |                    |  
|Soybean - R$ / bag – July 12, 2018 (CBOT)      |  |                    | 74.81    |   |                  |                         | 56.11    |                   |                          |  | 37.41              |  
|Soybean - R$ / bag – July 13, 2018 (CBOT)      |  |                    | 72.98    |   |                  |                         | 54.74    |                   |                          |  | 36.49              |  
|Soybean - R$ / bag – July 27, 2018 (CBOT)      |  |                    | 73.89    |   |                  |                         | 55.42    |                   |                          |  | 36.95              |  
|Soybean - R$ / bag – October 26, 2018 (CBOT)   |  |                    | 74.81    |   |                  |                         | 56.11    |                   |                          |  | 37.41              |  
|Ethanol - R$ / m^3 – July 31, 2018 (BM&F)      |  |                    | 1,610.00 |   |                  |                         | 1,207.50 |                   |                          |  | 805.00             |  
|Ethanol - R$ / m^3 – August 31, 2018 (BM&F)    |  |                    | 1,680.00 |   |                  |                         | 1,260.00 |                   |                          |  | 840.00             |  
|Ethanol - R$ / m^3 – September 28, 2018 (BM&F) |  |                    | 1,705.00 |   |                  |                         | 1,278.75 |                   |                          |  | 852.50             |  
|                                               |  |                    |          |   |                  |                         |          |                   |                          |  |                    |  
|U.S. dollar – October 26, 2018                 |  |                    | 3.92     |   |                  |                         | 2.94     |                   |                          |  | 1.96               |  
|                                               |  |                    |          |   |                  |                         |          |                   |                          |  |                    |  
|Interest (% rate) – July 2, 2018               |  |                    | 6.41     | % |                  |                         | 4.81     | %                 |                          |  | 3.21               | %
|Interest (% rate) – August 27, 2018            |  |                    | 6.51     | % |                  |                         | 4.88     | %                 |                          |  | 3.26               | %
|Interest (% rate) – May 10, 2019               |  |                    | 7.53     | % |                  |                         | 5.65     | %                 |                          |  | 3.77               | %
|Interest (% rate) – August 15, 2023            |  |                    | 11.09    | % |                  |                         | 8.32     | %                 |                          |  | 5.55               | %



|                                          |  |                    |        |  |                  |                         |       |                   |                          |  |                    |  |  |                  |        |  |  | 2017 |       
|----------------------------------------- |  | ------------------ | ------ |  | ---------------- | ----------------------- | ----- | ----------------- | ------------------------ |  | ------------------ |  |  | ---------------- | ------ |  |  | ---- | ------
|                                          |  |                    |        |  |                  | Devaluation in reais R$ |       |                   | Appreciation in reais R$ | 
|                                          |  | Probable 
scenario |        |  | Scenario I 
-25% |                         |       | Scenario II 
-50% |                          |  | Scenario III 
+25% |  |  | Scenario IV
+50% |       
|                                          |  |                    |        |  |                  |                         |       |                   |                          |  |                    |  |  |                  |        |  |  |      |       
|Soybean - R$ / bag – July 2017 (CBOT)     |  |                    | 68.72  |  |                  |                         | 51.54 |                   |                          |  | 34.36              |  |  |                  | 85.90  |  |  |      | 103.08
|Cattle - R$ / @ – October 2017 (BMF)      |  |                    | 124.58 |  |                  |                         | 93.44 |                   |                          |  | 62.29              |  |  |                  | 155.73 |  |  |      | 186.87
|Soybean - R$ / bag – November 2017 (CBOT) |  |                    | 69.64  |  |                  |                         | 52.23 |                   |                          |  | 34.82              |  |  |                  | 87.05  |  |  |      | 104.46
|Soybean - R$ / bag – April 2018 (CBOT)    |  |                    | 3.60   |  |                  |                         | 2.70  |                   |                          |  | 1.80               |  |  |                  | 4.50   |  |  |      | 5.40  
|Soybean - R$ / bag – June 2018 (CBOT)     |  |                    | 4.44   |  |                  |                         | 3.33  |                   |                          |  | 2.22               |  |  |                  | 5.55   |  |  |      | 6.66  
|Soybean - R$ / bag – July 2018 (CBOT)     |  |                    | 71.31  |  |                  |                         | 53.48 |                   |                          |  | 35.66              |  |  |                  | 89.14  |  |  |      | 106.97
|                                          |  |                    |        |  |                  |                         |       |                   |                          |  |                    |  |  |                  |        |  |  |      |       
|U.S. dollar – August 3, 2017              |  |                    | 3.33   |  |                  |                         | 2.50  |                   |                          |  | 1.67               |  |  |                  | 4.16   |  |  |      | 5.00  
|U.S. dollar – July 28, 2017               |  |                    | 3.33   |  |                  |                         | 2.50  |                   |                          |  | 1.67               |  |  |                  | 4.16   |  |  |      | 5.00  
|U.S. dollar – May 30, 2018                |  |                    | 3.49   |  |                  |                         | 2.62  |                   |                          |  | 1.75               |  |  |                  | 4.36   |  |  |      | 5.24  



This
sensitivity analysis aims to measure the impact of variable market changes on the aforementioned financial instruments of the
Company, considering all other market indicators remain unchanged. Estimated amounts below can significantly differ from amount
eventually settled.





F-32









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)







In
addition, the Company presents a summary of possible scenarios for the following 12 months of the Company’s financial instruments.
Reliable sources of index disclosure were used for the rates used in the “probable scenario”.





|                                                   |  |                      |  |                  |                           |   |          |          |            |   |      |  |       |             |  |  |        |   |  |                  |       |   |      | Scenario
    I - Possible |         |                  | Scenario
    II - Remote |  |       | Scenario
    I - Possible |  |                  | Scenario
    II – Remote |  
|-------------------------------------------------- |  | -------------------- |  | ---------------- | ------------------------- | - | -------- | -------- | ---------- | - | ---- |  | ----- | ----------- |  |  | ------ | - |  | ---------------- | ----- | - | ---- | ------------------------- | ------- | ---------------- | ------------------------ |  | ----- | ------------------------- |  | ---------------- | ------------------------ | -
|(*)
    Annual average rates                       |  | At
    June 30, 2018 |  |                  | Scenario
    I - Probable |   |          | Decrease |            |   | 25%  |  |       | Decrease    |  |  | 50%    |   |  | Increase         |       |   | 25%  |                           |         | Increase         |                          |  | 50%   |                          
|Operation                                          |  | Risk                 |  | Balance
    (R$) |                           |   | Notional |          |            |   | Rate |  |       | Balance(R$) |  |  | Rate   |   |  | Balance
    (R$) |       |   | Rate |                           |         | Balance
    (R$) |                          |  | Rate  |                           |  | Balance
    (R$) |                          |  
|Investment                                         |  | CDI                  |  |                  | 81,213                    |   |          |          | —          |   |      |  | 6.39  | %           |  |  | (983   | ) |  |                  | 7.60  | % |      |                           | (1,543  | )                |                          |  | 5.70  | %                         |  |                  | (3,086                   | )
|Marketable securities
    - LFT                    |  | SELIC                |  |                  | 10,086                    |   |          |          | —          |   |      |  | 6.40  | %           |  |  | (122   | ) |  |                  | 7.61  | % |      |                           | (193    | )                |                          |  | 5.71  | %                         |  |                  | (383                     | )
|Marketable securities
    - USD                    |  | CDI                  |  |                  | 19,355                    |   |          |          | —          |   |      |  | 6.39  | %           |  |  | (234   | ) |  |                  | 7.60  | % |      |                           | (368    | )                |                          |  | 5.70  | %                         |  |                  | (735                     | )
|Investment                                         |  | USD                  |  |                  | 22,700                    |   |          |          | 3,079      |   |      |  | 3.86  |             |  |  | (416   | ) |  |                  | 3.99  |   |      |                           | (3,072  | )                |                          |  | 2.99  |                           |  |                  | (6,145                   | )
|Total
    cash, cash equivalents                   |  |                      |  |                  | 133,354                   |   |          |          | 3,079      |   |      |  |       |             |  |  | (1,755 | ) |  |                  |       |   |      |                           | (5,176  | )                |                          |  |       |                           |  |                  | (10,349                  | )
|                                                   |  |                      |  |                  |                           |   |          |          |            |   |      |  |       |             |  |  |        |   |  |                  |       |   |      |                           |         |                  |                          |  |       |                           |  |                  |                          |  
|Financing for Working
    Capital                  |  | USD                  |  |                  | (486                      | ) |          |          | (126       | ) |      |  | 3.86  |             |  |  | (66    | ) |  |                  | 3.99  |   |      |                           | 485     |                  |                          |  | 2.99  |                           |  |                  | 970                      |  
|Financing for Working
    Capital                  |  | CDI                  |  |                  | (141,642                  | ) |          |          | —          |   |      |  | 6.39  | %           |  |  | (1,714 | ) |  |                  | 7.60  | % |      |                           | 2,691   |                  |                          |  | 5.70  | %                         |  |                  | 5,382                    |  
|Financing for Machinery
    and Equipment – FINAME |  | TJLP                 |  |                  | (1,317                    | ) |          |          | —          |   |      |  | 6.60  | %           |  |  | —      |   |  |                  | 6.60  | % |      |                           | 22      |                  |                          |  | 4.95  | %                         |  |                  | 43                       |  
|Financing
    for sugarcane                        |  | TJLP                 |  |                  | (11,893                   | ) |          |          | —          |   |      |  | 6.60  | %           |  |  | —      |   |  |                  | 6.60  | % |      |                           | 196     |                  |                          |  | 4.95  | %                         |  |                  | 392                      |  
|Total
    financing (b)                            |  |                      |  |                  | (155,338                  | ) |          |          | (126       | ) |      |  |       |             |  |  | (1,780 | ) |  |                  |       |   |      |                           | 3,394   |                  |                          |  |       |                           |  |                  | 6,787                    |  
|                                                   |  |                      |  |                  |                           |   |          |          |            |   |      |  |       |             |  |  |        |   |  |                  |       |   |      |                           |         |                  |                          |  |       |                           |  |                  |                          |  
|Araucária Farma
    III                            |  | Soybean bags         |  |                  | 8,527                     |   |          |          | 121,692    |   |      |  | 80.60 |             |  |  | —      |   |  |                  | 80.60 |   |      |                           | (2,132  | )                |                          |  | 60.45 |                           |  |                  | (4,264                   | )
|Araucária Farm
    IV                              |  | Soybean bags         |  |                  | 9,017                     |   |          |          | 129,499    |   |      |  | 86.08 |             |  |  | —      |   |  |                  | 86.08 |   |      |                           | (2,254  | )                |                          |  | 64.56 |                           |  |                  | (4,509                   | )
|Araucária Farm
    V                               |  | Soybean bags         |  |                  | 50,594                    |   |          |          | 717,840    |   |      |  | 93.27 |             |  |  | —      |   |  |                  | 93.27 |   |      |                           | (12,649 | )                |                          |  | 69.96 |                           |  |                  | (25,297                  | )
|Jatobá
    Farm Gleba 12A                          |  | Soybean bags         |  |                  | 8,657                     |   |          |          | 120,000    |   |      |  | 88.14 |             |  |  | —      |   |  |                  | 88.14 |   |      |                           | (2,164  | )                |                          |  | 66.10 |                           |  |                  | (4,329                   | )
|Total
    receivables from farms                   |  |                      |  |                  | 76,795                    |   |          |          | 1,089,031  |   |      |  |       |             |  |  | —      |   |  |                  | —     |   |      |                           | (19,199 | )                |                          |  |       |                           |  |                  | (38,399                  | )
|                                                   |  |                      |  |                  |                           |   |          |          |            |   |      |  |       |             |  |  |        |   |  |                  |       |   |      |                           |         |                  |                          |  |       |                           |  |                  |                          |  
|Derivative, net                                    |  | Grains               |  |                  | 805                       |   |          |          | (1,819,921 | ) |      |  | (a)   |             |  |  | —      |   |  |                  | (a)   |   |      |                           | 12,365  |                  |                          |  | (a)   |                           |  |                  | 23,068                   |  
|Derivative, net                                    |  | USD                  |  |                  | (2,079                    | ) |          |          | (35,800    | ) |      |  | (a)   |             |  |  | —      |   |  |                  | (a)   |   |      |                           | 28,857  |                  |                          |  | (a)   |                           |  |                  | 58,799                   |  
|Derivative, net                                    |  | Ethanol              |  |                  | 216                       |   |          |          | (2,100     | ) |      |  | (a)   |             |  |  | —      |   |  |                  | (a)   |   |      |                           | 1,105   |                  |                          |  | (a)   |                           |  |                  | 1,997                    |  
|Derivative, net                                    |  | Swap                 |  |                  | (14                       | ) |          |          | 64,810     |   |      |  | (a)   |             |  |  | —      |   |  |                  | (a)   |   |      |                           | 331     |                  |                          |  | (a)   |                           |  |                  | 321                      |  
|Margin
    - LFT Socopa                            |  | SELIC                |  |                  | 20,790                    |   |          |          | —          |   |      |  | 6.40  | %           |  |  | (249   | ) |  |                  | 7.60  | % |      |                           | (395    | )                |                          |  | 5.70  | %                         |  |                  | (790                     | )
|Total
    derivatives                              |  |                      |  |                  | 19,718                    |   |          |          |            |   |      |  |       |             |  |  | (249   | ) |  |                  |       |   |      |                           | 42,263  |                  |                          |  |       |                           |  |                  | 83,395                   |  
|                                                   |  |                      |  |                  |                           |   |          |          |            |   |      |  |       |             |  |  |        |   |  |                  |       |   |      |                           |         |                  |                          |  |       |                           |  |                  |                          |  
|Cresca, net                                        |  | USD                  |  |                  | (1,450                    | ) |          |          | (376       | ) |      |  | 3.86  |             |  |  | (51    | ) |  |                  | 3.99  |   |      |                           | 375     |                  |                          |  | 2.99  |                           |  |                  | 751                      |  
|Cresud,
    net                                    |  | USD                  |  |                  | 267                       |   |          |          | 69         |   |      |  | 3.86  |             |  |  | 8      |   |  |                  | 3.99  |   |      |                           | (69     | )                |                          |  | 2.99  |                           |  |                  | (138                     | )
|Total
    related parties                          |  |                      |  |                  | (1,183                    | ) |          |          | (307       | ) |      |  |       |             |  |  | (43    | ) |  |                  |       |   |      |                           | 306     |                  |                          |  |       |                           |  |                  | 613                      |  



| | (*) | SOURCE
Risks: Bloomberg
| | --- | -----------------------

| | (a) | For
sensitivity analysis of derivative positions, forward rates and prices at each maturity date of the transaction were used, according
to the table above.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | The
sensitivity analyses do not consider financing transactions with fixed rate.
| | --- | --------------------------------------------------------------------------------





F-33









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



| | b) | Credit
                                         risk
| | -- | ----------------------------------------------------



Credit
risk refers to the risk of the noncompliance by a counterparty of its contractual obligations, leading the Company to incur financial
losses. The risk to which the Company is exposed arises from the possibility of not recovering the amounts receivable from the
sale of sugarcane, grains, and from the leasing of land.



To
reduce credit risk in commercial transactions, the Company adopts the practice of defining credit limits in which it analyzes
factors such as: the counteerparty’s history, history of its business, commercial references and Credit Protection Institution
(Serasa). The Company also constantly monitors the outstanding balances.



Currently,
management does not expect losses due to the default of its counterparties and has no significant exposure to any individual counterparty.



| | c) | Liquidity
                                         risk
| | -- | -------------------------------------------------------



The
prudent management of liquidity risk implies the maintenance of sufficient cash and marketable securities to comply with its financial
commitments, due to the mismatch of terms or volume between the estimated amounts receivables and payables.



The
table below shows the Company’s financial liabilities by maturity. The amounts disclosed in the table are the discounted contractual
cash flows, in addition to the net derivative financial instruments, whose fair value is disclosed. With respect to payables for
the purchase of farms all amounts due at June 30, 2018 and 2017 are payable upon the fulfillment of certain conditions precedent
by the sellers and as a result its payment date cannot be determined and have been considered as payable on demand in the table
below and no interest or other financial charges have been considered.



|                                      |  | Note |  |  | Less
    than one year |        |  | From
    one to two years |  |        | From
    three to five years |  |  | Above
    five years |  |  | Total |       
|------------------------------------- |  | ---- |  |  | ---------------------- | ------ |  | ------------------------- |  | ------ | ---------------------------- |  |  | -------------------- |  |  | ----- | ------
|At
    June 30, 2018                  |  |      |  |  |                        |        |  |                           |  |        |                              |  |  |                      |  |  |       |       
|Trade
    payable                     |  | 14.1 |  |  |                        | 48,518 |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|Financial instruments
    derivatives |  | 6    |  |  |                        | 10,489 |  |                           |  | 2,145  |                              |  |  | —                    |  |  |       | —     
|Loans, financing
    and debentures   |  | 15   |  |  |                        | 70,088 |  |                           |  | 21,298 |                              |  |  | 143,793              |  |  |       | 40,841
|Payable for purchase
    of farms     |  | 13   |  |  |                        | —      |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|Transactions with
    related parties |  | 27   |  |  |                        | 1,831  |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|                                      |  |      |  |  |                        |        |  |                           |  |        |                              |  |  |                      |  |  |       |       
|At
    June 30, 2017                  |  |      |  |  |                        |        |  |                           |  |        |                              |  |  |                      |  |  |       |       
|Trade payable                         |  | 14.1 |  |  |                        | 37,805 |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|Financial instruments
    derivatives |  | 6    |  |  |                        | 3,978  |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|Loans and financing                   |  | 15   |  |  |                        | 56,620 |  |                           |  | 16,428 |                              |  |  | 15,129               |  |  |       | 23,998
|Payable for purchase
    of farms     |  | 13   |  |  |                        | 24,646 |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     
|Transactions with
    related parties |  | 27   |  |  |                        | 4,784  |  |                           |  | —      |                              |  |  | —                    |  |  |       | —     



| | 4.9. | Capital
                                         management
| | ---- | -----------------------------------------------------------



The
Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in
order to provide returns for stockholders and benefits for other stakeholders, and to maintain an optimal capital structure to
reduce the cost of capital.



In
order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to stockholders, return
capital to stockholders or, also, issue new shares or sell assets to reduce, for example, debt.





F-34











BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)







Consistent
with others in the industry, the Company monitors capital based on the leverage ratio. This ratio is calculated as net debt divided
by total capital. Net debt is calculated as total loans and financing (including “current and noncurrent loans and financing”
as shown in the Consolidated statement of financial position) less cash and cash equivalents. Total capital is calculated as equity,
as shown in the Consolidated statement of financial position, plus net debt.



According
to the following table, the Company presents net debt of loans, acquisitions payable and trade accounts payables and the financial
leverage index.



|                                                              |  | 2018 |          |   | 2017 | 
|------------------------------------------------------------- |  | ---- | -------- | - | ---- | 
|Loans, financing, debentures
    and finance leases (Note 15) |  |      | 276,020  |   |      | 
|Total payable for purchase of farms
    (Note 13)             |  |      | —        |   |      | 
|Total trade accounts payables (Note
    14.1)                 |  |      | 48,518   |   |      | 
|Total derivatives
    (Note 6)                                |  |      | 12,634   |   |      | 
|                                                              |  |      | 337,172  |   |      | 
|                                                              |  |      |          |   |      | 
|Less: cash and cash equivalents (Note
    5.1)                |  |      | (104,314 | ) |      | 
|Less: marketable
    securities (Notes 5.2)                   |  |      | (29,441  | ) |      | 
|                                                              |  |      | (133,755 | ) |      | 
|                                                              |  |      |          |   |      | 
|Net debt                                                      |  |      | 203,417  |   |      | 
|Total equity                                                  |  |      | 755,864  |   |      | 
|Financial leverage                                            |  |      | 26.91    | % |      | 



| | 4.10. | Hierarchy
                                         of fair value and financial instruments by category
| | ----- | ------------------------------------------------------------------------------------------------------



The
carrying amount (less impairment) of trade accounts receivable and payables approximate their fair values. The fair value of financial
liabilities, for disclosure purposes, is estimated by discounting the future contractual cash flows at the current market interest
rate that is available for similar financial instruments.



The
Company adopted IFRS 7 and IFRS 13 for financial instruments that are measured in the balance sheet at fair value; this requires
disclosure of fair value measurements by level of the following fair value measurement hierarchy:



●  
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).



●
  Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices) (Level 2).



●
  Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).



There
were no changes in the valuation methodology used to estimate the fair value of financial instruments categorized as levels 2
and 3.



There
were no transfers between fair value hierarchy levels during the year.



The
following table presents the Company’s main financial assets and liabilities, their classification and the fair value, as
well as the level of hierarchy:





|                                         |  |      |  |                                       |         |  |                           |  |        | June
    30, 2018 |  |                        |         |  |                                       |         |  |                           | June
    30, 2017 |       
|---------------------------------------- |  | ---- |  | ------------------------------------- | ------- |  | ------------------------- |  | ------ | ----------------- |  | ---------------------- | ------- |  | ------------------------------------- | ------- |  | ------------------------- | ----------------- | ------
|Consolidated
    – thousand R$           |  | Note |  | Fair
    value through profit or loss |         |  | Loans
    and receivables |  |        | Total             |  | Fair
    value Level 2 |         |  | Fair
    value through profit or loss |         |  | Loans
    and receivables |                   |       
|Assets                                   |  |      |  |                                       |         |  |                           |  |        |                   |  |                        |         |  |                                       |         |  |                           |                   |       
|Current                                  |  |      |  |                                       |         |  |                           |  |        |                   |  |                        |         |  |                                       |         |  |                           |                   |       
|Cash
    equivalents                     |  | 5.1  |  |                                       | 81,213  |  |                           |  | —      |                   |  |                        | 81,213  |  |                                       | 81,213  |  |                           |                   | 28,639
|Marketable
    securities (d)            |  | 5.2  |  |                                       | 11,215  |  |                           |  | —      |                   |  |                        | 11,215  |  |                                       | 11,215  |  |                           |                   | 6,972 
|Trade
    accounts receivable, net       |  | 7.1  |  |                                       | —       |  |                           |  | 57,185 |                   |  |                        | 57,185  |  |                                       | 57,185  |  |                           |                   | —     
|Receivable
    from sale of farm, net    |  | 7.1  |  |                                       | 21,372  |  |                           |  | —      |                   |  |                        | 21,372  |  |                                       | 21,372  |  |                           |                   | 9,136 
|Derivative
    financial instruments (c) |  | 6    |  |                                       | 28,299  |  |                           |  | —      |                   |  |                        | 28,299  |  |                                       | 7,293   |  |                           |                   | 4,090 
|Transactions
    with related parties    |  | 27   |  |                                       | —       |  |                           |  | 1,660  |                   |  |                        | 1,660   |  |                                       | 1,660   |  |                           |                   | —     
|                                         |  |      |  |                                       |         |  |                           |  |        |                   |  |                        |         |  |                                       |         |  |                           |                   |       
|Noncurrent                               |  |      |  |                                       |         |  |                           |  |        |                   |  |                        |         |  |                                       |         |  |                           |                   |       
|Marketable
    securities                |  | 5.2  |  |                                       | 18,226  |  |                           |  | —      |                   |  |                        | 18,226  |  |                                       | 18,226  |  |                           |                   | 17,088
|Trade
    accounts receivable, net       |  | 7.1  |  |                                       | —       |  |                           |  | —      |                   |  |                        | —       |  |                                       | —       |  |                           |                   | —     
|Receivable
    from sale of farm         |  | 7.1  |  |                                       | 55,423  |  |                           |  | —      |                   |  |                        | 55,423  |  |                                       | 55,423  |  |                           |                   | 22,592
|Derivative
    financial instruments (c) |  | 6    |  |                                       | 4,053   |  |                           |  | —      |                   |  |                        | 4,053   |  |                                       | 4,053   |  |                           |                   | 1     
|Transactions
    with related parties    |  | 27   |  |                                       | —       |  |                           |  | —      |                   |  |                        | —       |  |                                       | —       |  |                           |                   | —     
|Total                                    |  |      |  |                                       | 219,801 |  |                           |  | 58,845 |                   |  |                        | 278,646 |  |                                       | 257,640 |  |                           |                   | 88,518









F-35











BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)









|                                                                |  |      |  | June 30, 2018                                       |        |  | June
    30, 2017                           | 
|--------------------------------------------------------------- |  | ---- |  | --------------------------------------------------- | ------ |  | ------------------------------------------- | 
|Consolidated
    – thousand R$                                  |  | Note |  | Designated
    at fair value through profit or loss |        |  | Financial
    liabilities at amortized cost | 
|Liabilities                                                     |  |      |  |                                                     |        |  |                                             | 
|Current                                                         |  |      |  |                                                     |        |  |                                             | 
|Trade
    accounts payable                                      |  | 14.1 |  |                                                     | —      |  |                                             | 
|Loans,
    financing and debentures (a)                         |  | 15   |  |                                                     | —      |  |                                             | 
|Finance
    lease sugarcane crop -  Partnership III (b)         |  | 15   |  |                                                     | 1,676  |  |                                             | 
|Derivative
    financial instruments (c)                        |  | 6    |  |                                                     | 10,489 |  |                                             | 
|Payables
    for purchase of farms                              |  | 13   |  |                                                     | —      |  |                                             | 
|                                                                |  |      |  |                                                     |        |  |                                             | 
|Noncurrent                                                      |  |      |  |                                                     |        |  |                                             | 
|Loans,
    financing and debentures (a)                         |  | 15   |  |                                                     | —      |  |                                             | 
|Finance
    lease sugarcane crop -  Partnerships III and IV (b) |  | 15   |  |                                                     | 18,539 |  |                                             | 
|Derivative
    financial instruments (c)                        |  | 6    |  |                                                     | 2,145  |  |                                             | 
|Total                                                           |  |      |  |                                                     | 32,849 |  |                                             | 







(a) The
carrying amount of loans and financing in the financial statements, approximate the fair value, since the rates of these instruments
are substantially subsidized and there is no intention of early settlement;

(b)
Finance lease is measured at fair value in Level 3. The pricing takes into account the average ATR for lease agreements disclosed
by Consecana (138 Kg ATR / TC), at the Consecana price for the respective month, at a weighting of 50% EHC and 50% EAC.

(c)
The Derivative transactions negotiated in an active market in the amount of R$1,275 (R$3,169 at June 30, 2017) are measured at
fair value at Level 1, and over-the-counter transactions are measured at Level 2, as presented in the table above.



| | 5. | Cash
                                         and cash equivalents and marketable securities
| | -- | --------------------------------------------------------------------------------------------



5.1.
Cash and cash equivalents



|                               |  | CDI |                                                       |  | 2018 |  |         | 2017 | 
|------------------------------ |  | --- | ----------------------------------------------------- |  | ---- |  | ------- | ---- | 
|Cash and banks                 |  |     | —                                                     |  |      |  | 23,101  |      | 
|Repurchase agreements (a)      |  |     | 55%
                                         a 65%    |  |      |  | 15,242  |      | 
|Bank deposit certificates      |  |     | 99%
                                         to 100%  |  |      |  | 33,137  |      | 
|Letter of Mercantile
    Lease |  |     | 101%
                                         to 102% |  |      |  | 32,834  |      | 
|                               |  |     |                                                       |  |      |  | 104,314 |      | 



(a)     
The Company uses this type of investment for funds that will be redeemed in less than 30 days, according to the projected cash
flow and also in case of need to invest funds that were received after banking hours.



The
Company has R$22,700 (R$13,155 at June 30, 2017), of bank balances denominated in foreign currency which do not bear any interest.



5.2.
Marketable securities



|                                      |  | 2018 |        |  | 2017 | 
|------------------------------------- |  | ---- | ------ |  | ---- | 
|                                      |  |      |        |  |      | 
|Investment fund                       |  |      | —      |  |      | 
|Bank deposit certificates (a)         |  |      | 1,129  |  |      | 
|Banco do Nordeste (BNB) (b)           |  |      | —      |  |      | 
|Treasury financial
    bills (c)      |  |      | 10,086 |  |      | 
|Total
    current                     |  |      | 11,215 |  |      | 
|                                      |  |      |        |  |      | 
|Bank deposit certificates (a)         |  |      | 9,588  |  |      | 
|Banco do Nordeste
    (BNB) (a) / (b) |  |      | 8,638  |  |      | 
|Total
    noncurrent                  |  |      | 18,226 |  |      | 
|                                      |  |      |        |  |      | 
|Marketable
    securities             |  |      | 29,441 |  |      | 



| | (a) | Indexed
                                         to rates from 98% to 102,5% of the CDI – Interbank Deposit Certificate.
| | --- | ------------------------------------------------------------------------------------------------------------------------



| | (b) | The
                                         securities in BNB consist of CDBs provided as collateral for financing from BNB Bank,
                                         to be held up to the end of the contract in July 2019.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Treasury
                                         bonds indexed to the Selic rate.
| | --- | ----------------------------------------------------------------------------------





F-36











BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)







6.
Derivative financial instruments





|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  | June,
    20 2018           
|---------------- |  | --------------- |  | -------------------------------------- |  | ----------------------------------- |  | ---------- |  |  | ------- | ------- | - | --------------- |  | ------ | ------------------- |  |  | ----------------------------
|Risk             |  | Maturity        |  | Outstanding
    derivative instruments |  | Counter
    party                   |  | Receivable |  |  | Payable |         |   | Net
    balance |  |        | Notional
    (’000) |  |  | Call
    option (put option)
|Currency
    US$ |  | October
    -18 |  | Options                                |  | FC
    Stone                        |  | 1,490      |  |  |         | (2,484  | ) |                 |  | (994   | )                   |  |  | (4,800                      
|Currency
    US$ |  | June
    -18    |  | Dollar
    – 1st Futures               |  | BM&F                                |  | 1          |  |  |         | (1,086  | ) |                 |  | (1,085 | )                   |  |  | (31,000                     
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  | Current                                |  |                                     |  | 1,491      |  |  |         | (3,570  | ) |                 |  | (2,079 | )                   |  |  | (35,800                     
|                 |  |                 |  | Noncurrent                             |  |                                     |  | —          |  |  |         | —       |   |                 |  | —      |                     |  |  | —                           
|                 |  |                 |  | Total  US$
    risk                    |  |                                     |  | 1,491      |  |  |         | (3,570  | ) |                 |  | (2,079 | )                   |  |  | (35,800                     
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|Soybean
    CBOT |  | July-18         |  | Soybean
    Options                    |  | Trading
    Companies/Banks/CBOT    |  | —          |  |  |         | (7      | ) |                 |  | (7     | )                   |  |  | —                           
|Soybean
    CBOT |  | October-18      |  | Soybean
    Options                    |  | Trading
    Companies/Banks/CBOT    |  | —          |  |  |         | (1,275  | ) |                 |  | (1,275 | )                   |  |  | —                           
|Soybean
    CBOT |  | July-18         |  | Futures
    Soybean                    |  | Trading
    Companies/Banks/CBOT    |  | 5,451      |  |  |         | (5,569  | ) |                 |  | (118   | )                   |  |  | —                           
|Soybean
    CBOT |  | October-18      |  | Futures
    Soybean                    |  | Trading
    Companies/Banks/CBOT    |  | 351        |  |  |         | —       |   |                 |  | 351    |                     |  |  | —                           
|Soybean
    CBOT |  | July-19         |  | Futures
    Soybean                    |  | Trading
    Companies/Banks/CBOT    |  | 3,999      |  |  |         | (2,145  | ) |                 |  | 1,854  |                     |  |  | —                           
|Ethanol
    BM&F |  | July-18         |  | Futures
    Ethanol                    |  | BM&F                                |  | 42         |  |  |         | —       |   |                 |  | 42     |                     |  |  | —                           
|Ethanol
    BM&F |  | August-18       |  | Futures
    Ethanol                    |  | BM&F                                |  | 94         |  |  |         | —       |   |                 |  | 94     |                     |  |  | —                           
|Ethanol
    BM&F |  | September-18    |  | Futures
    Ethanol                    |  | BM&F                                |  | 80         |  |  |         | —       |   |                 |  | 80     |                     |  |  | —                           
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  | Current
    (bags)                     |  |                                     |  | 5,802      |  |  |         | (6,851  | ) |                 |  | (1,049 | )                   |  |  | —                           
|                 |  |                 |  | Current
    (Ethanol)                  |  |                                     |  | 216        |  |  |         | —       |   |                 |  | 216    |                     |  |  | —                           
|                 |  |                 |  | Noncurrent
    (bags)                  |  |                                     |  | 3,999      |  |  |         | (2,145  | ) |                 |  | 1,854  |                     |  |  | —                           
|                 |  |                 |  | Total
    commodities risk             |  |                                     |  | 10,017     |  |  |         | (8,996  | ) |                 |  | 1,021  |                     |  |  | —                           
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|Interest
    R$  |  | January-18      |  | DI
    SWAP x Dollar                   |  | Banco
    Safra                     |  | —          |  |  |         | —       |   |                 |  | —      |                     |  |  | —                           
|Interest
    R$  |  | August-23       |  | Pre-DI
    SWAP                        |  | Bradesco                            |  | 54         |  |  |         | —       |   |                 |  | 54     |                     |  |  | 14,810                      
|Interest
    R$  |  | July-18         |  | Pre-DI
    SWAP                        |  | ABC                                 |  | —          |  |  |         | (12     | ) |                 |  | (12    | )                   |  |  | 10,000                      
|Interest
    R$  |  | August-18       |  | Pre-DI
    SWAP                        |  | Itaú
    BBA Jaborandi              |  | —          |  |  |         | (11     | ) |                 |  | (11    | )                   |  |  | 20,000                      
|Interest
    R$  |  | May-19          |  | Pre-DI
    SWAP                        |  | Itaú
    BBA Jaborandi              |  | —          |  |  |         | (45     | ) |                 |  | (45    | )                   |  |  | 20,000                      
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  | Current                                |  |                                     |  | —          |  |  |         | (68     | ) |                 |  | (68    | )                   |  |  | 50,000                      
|                 |  |                 |  | Noncurrent                             |  |                                     |  | 54         |  |  |         | —       |   |                 |  | 54     |                     |  |  | 14,810                      
|                 |  |                 |  | Total
    interest rate risk           |  |                                     |  | 54         |  |  |         | (68     | ) |                 |  | (14    | )                   |  |  | 64,810                      
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  | Total
    risks                        |  |                                     |  | 11,562     |  |  |         | (12,634 | ) |                 |  | (1,072 | )                   |  |  | 29,010                      
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  | Margin
    deposit                     |  |                                     |  | 20,790     |  |  |         | —       |   |                 |  | 20,790 |                     |  |  |                             
|                 |  |                 |  |                                        |  |                                     |  |            |  |  |         |         |   |                 |  |        |                     |  |  |                             
|                 |  |                 |  |                                        |  | Current                             |  | 28,299     |  |  |         | (10,489 | ) |                 |  |        |                     |  |  |                             
|                 |  |                 |  |                                        |  | Noncurrent                          |  | 4,053      |  |  |         | (2,145  | ) |                 |  |        |                     |  |  |                             
|                 |  |                 |  |                                        |  | P
&L     at June 30, 2018 (Note 23) |  | 62,965     |  |  |         | (68,300 | ) |                 |  |        |                     |  |  |                             









F-37









BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  | June,
    20 2017            |       
|-------------------- |  | ------------------------------------------------ |  | -------------------------------------- |  | ---------------------------------- |  | ---------- | ------ |  | ------- |  | ------- | --------------- |  |  | ------------------- | - |  | ---------------------------- | ------
|Risk                 |  | Maturity                                         |  | Outstanding derivative
    instruments |  | Counter party                      |  | Receivable |        |  | Payable |  |         | Net
    balance |  |  | Notional
    (’000) |   |  | Call
    option (put option) |       
|Currency US$         |  | August-17                                        |  | BM&F                                   |  | BM&F                               |  |            | 15     |  |         |  | —       |                 |  |  | 15                  |   |  |                              | 2,000 
|Currency US$         |  | July-
                                         7 |  | NDF                                    |  | FC Stone                           |  |            | 423    |  |         |  | —       |                 |  |  | 423                 |   |  |                              | (2,000
|Currency US$         |  | January-18                                       |  | Options                                |  | FC Stone                           |  |            | —      |  |         |  | (638    | )               |  |  | (638                | ) |  |                              | (2,500
|Currency US$         |  | May-18                                           |  | Accumulator                            |  | Macquarie                          |  |            | 4      |  |         |  | —       |                 |  |  | 4                   |   |  |                              | (30   
|Currency US$         |  | June-18                                          |  | Options                                |  | FC Stone                           |  |            | 154    |  |         |  | (171    | )               |  |  | (17                 | ) |  |                              | (1,000
|                     |  |                                                  |  | Current                                |  |                                    |  |            | 596    |  |         |  | (809    | )               |  |  | (213                | ) |  |                              | (3,530
|                     |  |                                                  |  | Noncurrent                             |  |                                    |  |            | —      |  |         |  | —       |                 |  |  | —                   |   |  |                              | —     
|                     |  |                                                  |  | Total  US$
    risk                    |  |                                    |  |            | 596    |  |         |  | (809    | )               |  |  | (213                | ) |  |                              | (3,530
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|Soybean CBOT         |  | July-17                                          |  | Soybean Futures                        |  | Trading Companies/Banks/CBOT       |  |            | 1,377  |  |         |  | (2,219  | )               |  |  | (842                | ) |  |                              | —     
|Soybean CBOT         |  | November-17                                      |  | Soybean Futures                        |  | Trading Companies/ Banks /CBOT     |  |            | 5      |  |         |  | —       |                 |  |  | 5                   |   |  |                              | —     
|Soybean CBOT         |  | April-18                                         |  | Soybean Options                        |  | Trading Companies/ Banks /CBOT     |  |            | —      |  |         |  | (408    | )               |  |  | (408                | ) |  |                              | —     
|Soybean CBOT         |  | June-18                                          |  | Soybean Options                        |  | Trading Companies/ Banks /CBOT     |  |            | —      |  |         |  | (514    | )               |  |  | (514                | ) |  |                              | —     
|Soybean CBOT         |  | July-18                                          |  | Soybean Futures                        |  | Trading Companies/ Banks /CBOT     |  |            | 1      |  |         |  | —       |                 |  |  | 1                   |   |  |                              | —     
|Live Cattle
    BM&F |  | October-17                                       |  | Live Cattle
    Futures                |  | BM&F                               |  |            | 14     |  |         |  | —       |                 |  |  | 14                  |   |  |                              | —     
|                     |  |                                                  |  | Current (bags)                         |  |                                    |  |            | 1,382  |  |         |  | (3,141  | )               |  |  | (1,759              | ) |  |                              | —     
|                     |  |                                                  |  | Current (heads)                        |  |                                    |  |            | 14     |  |         |  | —       |                 |  |  | 14                  |   |  |                              | —     
|                     |  |                                                  |  | Noncurrent
    (bags)                  |  |                                    |  |            | 1      |  |         |  | —       |                 |  |  | 1                   |   |  |                              | —     
|                     |  |                                                  |  | Total
    commodities risk             |  |                                    |  |            | 1,397  |  |         |  | (3,141  | )               |  |  | (1,744              | ) |  |                              | —     
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|Interest R$          |  | November-17                                      |  | Pre-DI SWAP                            |  | Itaú BBA                           |  |            | 89     |  |         |  | —       |                 |  |  | 89                  |   |  |                              | 7,000 
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  | Current                                |  |                                    |  |            | 89     |  |         |  | —       |                 |  |  | 89                  |   |  |                              | 7,000 
|                     |  |                                                  |  | Noncurrent                             |  |                                    |  |            | —      |  |         |  | —       |                 |  |  | —                   |   |  |                              | —     
|                     |  |                                                  |  | Total
    interest rate risk           |  |                                    |  |            | 89     |  |         |  | —       |                 |  |  | 89                  |   |  |                              | 7,000 
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  | Daily adjustments –
    Currency       |  |                                    |  |            | —      |  |         |  | (15     | )               |  |  | (15                 | ) |  |                              |       
|                     |  |                                                  |  | Daily adjustments –
    Commodities    |  |                                    |  |            | —      |  |         |  | (13     | )               |  |  | (13                 | ) |  |                              |       
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  | Total
    risks                        |  |                                    |  |            | 2,082  |  |         |  | (3,978  | )               |  |  | (1,896              | ) |  |                              | 3,470 
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  | Margin
    deposit                     |  |                                    |  |            | 2,009  |  |         |  | —       |                 |  |  | 2,009               |   |  |                              |       
|                     |  |                                                  |  |                                        |  |                                    |  |            |        |  |         |  |         |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  |                                        |  | Current                            |  |            | 4,090  |  |         |  | (3,978  | )               |  |  |                     |   |  |                              |       
|                     |  |                                                  |  |                                        |  | Noncurrent                         |  |            | 1      |  |         |  | —       |                 |  |  |                     |   |  |                              |       
|                     |  |                                                  |  |                                        |  | P&L at June 30, 2017
    (Note 23) |  |            | 62,226 |  |         |  | (44,791 | )               |  |  |                     |   |  |                              |       



The Company uses derivative
financial instruments such as forward currency contracts and forward commodities contracts to hedge against currency risk and commodities
prices, respectively.



The margin deposits in operations
with derivatives refer to the called margins by counterparties in operations with derivative instruments.



The total fair value of a derivative
is classified as noncurrent assets or liabilities if the remaining maturity of the derivative is over 12 months, and as current
assets or liabilities if the remaining maturity of the derivative is less than 12 months.



| | 7. | Accounts receivable and others
| | -- | ------------------------------



|                          |  | Note |      |  | 2018 |  |        | 2017 | 
|------------------------- |  | ---- | ---- |  | ---- |  | ------ | ---- | 
|Trade accounts receivable |  |      | 7.1  |  |      |  | 78,557 |      | 
|Recoverable taxes         |  |      | 7.2  |  |      |  | 9,479  |      | 
|Advances to suppliers     |  |      |      |  |      |  | 6,711  |      | 
|Other receivables         |  |      |      |  |      |  | 429    |      | 
|Total current             |  |      |      |  |      |  | 95,176 |      | 
|                          |  |      |      |  |      |  |        |      | 
|Trade accounts receivable |  |      | 7.1  |  |      |  | 55,423 |      | 
|Recoverable taxes         |  |      | 7.2  |  |      |  | 17,847 |      | 
|Judicial deposits         |  |      | 25.c |  |      |  | 1,505  |      | 
|Total noncurrent          |  |      |      |  |      |  | 74,775 |      | 





F-38







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



| | 7.1 | Trade accounts receivable
| | --- | -------------------------



|                                    |  | 2018 |        |   | 2017 | 
|----------------------------------- |  | ---- | ------ | - | ---- | 
|Sale of sugarcane (c)               |  |      | 36,742 |   |      | 
|Sale of grains (d )                 |  |      | 14,757 |   |      | 
|Sale of cattle                      |  |      | 589    |   |      | 
|Leases of land                      |  |      | 5,747  |   |      | 
|Sale of machinery                   |  |      | 216    |   |      | 
|Sale of farms (e)                   |  |      | 21,372 |   |      | 
|                                    |  |      | 79,423 |   |      | 
|                                    |  |      |        |   |      | 
|Allowance for doubtful accounts (a) |  |      | (866   | ) |      | 
|                                    |  |      |        |   |      | 
|Total current                       |  |      | 78,557 |   |      | 
|                                    |  |      |        |   |      | 
|Sale of machinery                   |  |      | —      |   |      | 
|Sale of farms (e)                   |  |      | 55,423 |   |      | 
|                                    |  |      |        |   |      | 
|Total non-current                   |  |      | 55,423 |   |      | 



| | a) | Changes in the allowance for doubtful accounts:
| | -- | -----------------------------------------------



|At June 30, 2016      |  |  | 1,163 |  
|--------------------- |  |  | ----- | -
|Accrual of provision  |  |  | 49    |  
|Write-off or reversal |  |  | (351  | )
|At June 30, 2017      |  |  | 861   |  
|Accrual of provision  |  |  | 284   |  
|Write-off or reversal |  |  | (279  | )
|At June 30, 2018      |  |  | 866   |  



The estimated losses in allowance
for doubtful accounts were recorded as selling expenses in the statement of operations. The allowance for doubtful accounts is
based on the analysis of accounts, individually by client, and the amounts included in the allowance are written-off when these
amounts are no longer expected to be recovered.



| | b) | Breakdown of receivable by maturity
| | -- | -----------------------------------



|                |  | 2018 |         |  | 2017 | 
|--------------- |  | ---- | ------- |  | ---- | 
|Falling due:    |  |      |         |  |      | 
|Up to 30 days   |  |      | 34,305  |  |      | 
|31 to 90 days   |  |      | 19,611  |  |      | 
|91 to 180 days  |  |      | 9,159   |  |      | 
|181 to 360 days |  |      | 15,316  |  |      | 
|Over 360 days   |  |      | 55,423  |  |      | 
|                |  |      |         |  |      | 
|Past due:       |  |      |         |  |      | 
|Up to 30 days   |  |      | 106     |  |      | 
|31 to 90 days   |  |      | 60      |  |      | 
|91 to 180 days  |  |      | 2       |  |      | 
|181 to 360 days |  |      | 8       |  |      | 
|Over 360 days   |  |      | 856     |  |      | 
|                |  |      | 134,846 |  |      | 



| | c) | Sale of sugarcane
| | -- | -----------------



The Company has two sugarcane
supply agreements. The first agreement was with Brenco Companhia Brasileira de Energia Renovável and the second agreement
is included in the partnership IV Agreement, as mentioned in the Explanatory Note on Commitments, whose credit risks are assessed
in accordance with the internal policy, as presented in Note 4.8b.



All the risks were covered during
the fiscal year ended on June 30, 2018, and there is no record of default until the date of disclosure of these Financial Statements.





F-39







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



| | d) | Sale of grains
| | -- | --------------



For the years ended June 30,
2018 and 2017, corn and soybean were sold mainly to the customers Bunge Alimentos, Amaggi and Cargill Agrícola.



| | e) | Receivables from sale of farms
| | -- | ------------------------------



Total amounts sold, collected
and receivables from sale of farms are as follows:



|                                   |  | Araucária I |        |   | Araucária II |  |        | Araucária III |  |  | Araucária IV |   |  | Araucária V |        |   | Jatobá I |  |        | Consolidated | 
|---------------------------------- |  | ----------- | ------ | - | ------------ |  | ------ | ------------- |  |  | ------------ | - |  | ----------- | ------ | - | -------- |  | ------ | ------------ | 
|At June 30, 2016                   |  |             | 1,930  |   |              |  | 14,411 |               |  |  | —            |   |  |             | —      |   |          |  | —      |              | 
|Sale amount (a)                    |  |             | —      |   |              |  | —      |               |  |  | 12,451       |   |  |             | 16,987 |   |          |  | —      |              | 
|Receipts                           |  |             | (1,950 | ) |              |  | (8,188 | )             |  |  | (2,124       | ) |  |             | (3,009 | ) |          |  | —      |              | 
|Restatement of nominal value       |  |             | (23    | ) |              |  | (4,733 | )             |  |  | 412          |   |  |             | 273    |   |          |  | —      |              | 
|Unwind of present value adjustment |  |             | 43     |   |              |  | 2,913  |               |  |  | (1,950       | ) |  |             | (3,256 | ) |          |  | —      |              | 
|At June 30, 2017                   |  |             | —      |   |              |  | 4,403  |               |  |  | 8,789        |   |  |             | 10,995 |   |          |  | —      |              | 
|Sale amount (a)                    |  |             | —      |   |              |  | —      |               |  |  | —            |   |  |             | —      |   |          |  | 52,405 |              | 
|Receipts                           |  |             | —      |   |              |  | (4,994 | )             |  |  | (2,493       | ) |  |             | (4,250 | ) |          |  | (5,267 | )            | 
|Restatement of nominal value       |  |             | —      |   |              |  | 142    |               |  |  | 1,542        |   |  |             | 1,510  |   |          |  | 6,632  |              | 
|Unwind of present value adjustment |  |             | —      |   |              |  | 449    |               |  |  | 689          |   |  |             | 762    |   |          |  | (3,176 | )            | 
|At June 30, 2018                   |  |             | —      |   |              |  | —      |               |  |  | 8,527        |   |  |             | 9,017  |   |          |  | 50,594 |              | 
|                                   |  |             |        |   |              |  |        |               |  |  |              |   |  |             |        |   |          |  |        |              | 
|Current                            |  |             |        |   |              |  |        |               |  |  |              |   |  |             |        |   |          |  |        |              | 
|Non-current                        |  |             |        |   |              |  |        |               |  |  |              |   |  |             |        |   |          |  |        |              | 



| | (a) | Information on sales and the amounts received in the
fiscal year ended June 30, 2018 is presented in Notes 1.2 and 19.b
| | --- | -----------------------------------------------------------------------------------------------------------------------



| | 7.2 | Recoverable taxes
| | --- | -----------------



|                                                                    |  | 2018 |        |  | 2017 | 
|------------------------------------------------------------------- |  | ---- | ------ |  | ---- | 
|Withholding income tax (IRRF) on financial investments to be offset |  |      | 3,843  |  |      | 
|Income tax losses and social contribution carryforwards             |  |      | 148    |  |      | 
|Other recoverable taxes and contributions                           |  |      | 5,488  |  |      | 
|Total current (a)                                                   |  |      | 9,479  |  |      | 
|                                                                    |  |      |        |  |      | 
|ICMS recoverable                                                    |  |      | 8,429  |  |      | 
|ICMS recoverable on property, plant and equipment                   |  |      | 409    |  |      | 
|Non-cumulative PIS and COFINS to be offset                          |  |      | 6,837  |  |      | 
|IRRF on financial investments to be offset                          |  |      | 2,172  |  |      | 
|Total noncurrent                                                    |  |      | 17,847 |  |      | 



| | (a) | Of the amounts consolidated as of June 30, 2018, the
amount of R$ 4,844 refers to Value Added Tax in Paraguay.
| | --- | --------------------------------------------------------------------------------------------------------------



| | 8. | Inventories
| | -- | -----------



|                      |  | 2018 |        |  | 2017 | 
|--------------------- |  | ---- | ------ |  | ---- | 
|Soybean               |  |      | 50,289 |  |      | 
|Corn                  |  |      | 6,247  |  |      | 
|Other harvests        |  |      | 1,153  |  |      | 
|Agricultural products |  |      | 57,689 |  |      | 
|                      |  |      |        |  |      | 
|Raw materials         |  |      | 11,933 |  |      | 
|                      |  |      | 69,622 |  |      | 



The amounts of inventories of
agricultural products are disclosed net of the provision, as follows:



| | 8.1 | Adjustment to recoverable value of inventories of
agricultural products
| | --- | -----------------------------------------------------------------------



|At June 30, 2016                                               |  |  | (4     | )
|-------------------------------------------------------------- |  |  | ------ | -
|Provision for  recoverable value of agricultural products, net |  |  | (1,655 | )
|Realization as cost of sales                                   |  |  | 447    |  
|At June 30, 2017                                               |  |  | (1,212 | )
|Provision for  recoverable value of agricultural products, net |  |  | 883    |  
|Realization as cost of sales                                   |  |  | 325    |  
|At June 30, 2018                                               |  |  | (4     | )





F-40







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



| | 9. | Biological assets
| | -- | -----------------



|                     |  | 2018 |        |  | 2017 | 
|-------------------- |  | ---- | ------ |  | ---- | 
|Production cattle    |  |      | 34,053 |  |      | 
|Grain plantation     |  |      | 2,203  |  |      | 
|Sugarcane plantation |  |      | 59,790 |  |      | 
|                     |  |      |        |  |      | 
|Total                |  |      | 96,046 |  |      | 
|                     |  |      |        |  |      | 
|Current              |  |      | 61,993 |  |      | 
|Noncurrent           |  |      | 34,053 |  |      | 



The amounts of expenditures
with plantation and tilling of crops are substantially represented by expenditures with the formation of harvest such as: seeds,
fertilizers, pesticides, depreciation and manpowers used in the crops.



The area (hectares) to be harvested
corresponding to the biological assets is as follows:



|              |  | Planted area (Hectares) |       
|------------- |  | ----------------------- | ------
|              |  |                         | 2018  
|Grains        |  |                         | 1,322 
|Sugarcane (a) |  |                         | 29,955
|              |  |                         | 31,277



| | (a) | For sugarcane the area considered above refers to
the total to be harvested in all the future cuts, considered in the cash flow for calculation of fair value of biological assets.
This area includes the hectares leased from Brenco and Partnership IV, according to contracts executed on May 8, 2015 and February
7, 2017, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Changes in agricultural activity



|                                   |  | Grains |          |   | Sugarcane | 
|---------------------------------- |  | ------ | -------- | - | --------- | 
|At June 30, 2016                   |  |        | —        |   |           | 
|Expenditures with plantation       |  |        | 98,314   |   |           | 
|Expenditures with tilling          |  |        | —        |   |           | 
|Lease contract – Partnership IV    |  |        | —        |   |           | 
|Fair value variation (a) (Note 18) |  |        | 4,302    |   |           | 
|Harvest of agricultural produce    |  |        | (101,231 | ) |           | 
|At June 30, 2017                   |  |        | 1,385    |   |           | 
|Expenditures with plantation       |  |        | 81,080   |   |           | 
|Expenditures with tilling          |  |        | —        |   |           | 
|Fair value variation (a) (Note 18) |  |        | 54,892   |   |           | 
|Harvest of agricultural produce    |  |        | (136,396 | ) |           | 
|Effect of conversion               |  |        | 1,242    |   |           | 
|At June 30, 2018                   |  |        | 2,203    |   |           | 



| | (a) | For sugarcane, the area considered above refers to
the total to be harvested in all future cuts, considered in the cash flow for calculating the fair value of biological assets.
This area includes hectares leased from Brenco as per the agreement signed on May 8, 2015, and the total of 15,000 hectares related
to an agricultural partnership, as per the agreement signed on February 7, 2017.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Changes in cattle
raising activity



|                              |  | Heads of cattle (in number) |        |   | Cattle for production | 
|----------------------------- |  | --------------------------- | ------ | - | --------------------- | 
|At July 1, 2016               |  |                             | 4,148  |   |                       | 
|Acquisition/birth costs       |  |                             | 4,729  |   |                       | 
|Cattle-raising costs          |  |                             | —      |   |                       | 
|Sales                         |  |                             | (136   | ) |                       | 
|Deaths                        |  |                             | (97    | ) |                       | 
|Change in fair value (Note18) |  |                             | —      |   |                       | 
|At June 30, 2017              |  |                             | 8,644  |   |                       | 
|Acquisition/birth costs       |  |                             | 14,680 |   |                       | 
|Handling costs                |  |                             | —      |   |                       | 
|Sales                         |  |                             | (2,006 | ) |                       | 
|Deaths                        |  |                             | (325   | ) |                       | 
|Change in fair value (Note18) |  |                             | —      |   |                       | 
|Effect of conversion          |  |                             | —      |   |                       | 
|At June 30, 2018              |  |                             | 20,993 |   |                       | 





F-41







BrasilAgro – Companhia Brasileira
de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



Quantitative data
about cattle raising activity, expressed in heads of cattle



|                 |  | Work animals |       
|---------------- |  | ------------ | ------
|At June 30, 2017 |  |              | 8,644 
|At June 30, 2018 |  |              | 20,993



Fair value hierarchy
at June 30, 2018



|          |  | Amount |        |  | Fair value
|--------- |  | ------ | ------ |  | ----------
|Sugarcane |  |        | 59,790 |  |           
|Cattle    |  |        | 34,053 |  |           
|Grains    |  |        | 2,203  |  |           



Changes in fair value
in profit or loss



|          |  | 2018 |        |  | 2017 |  |        | 2016 | 
|--------- |  | ---- | ------ |  | ---- |  | ------ | ---- | 
|Grains    |  |      | 54,892 |  |      |  | 4,302  |      | 
|Sugarcane |  |      | 43,952 |  |      |  | 11,532 |      | 
|Cattle    |  |      | 239    |  |      |  | (3,568 | )    | 
|          |  |      |        |  |      |  |        |      | 
|          |  |      | 99,083 |  |      |  | 12,266 |      | 



F-42







BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)





| | 10. | Investment properties – noncurrent
| | --- | ----------------------------------



|                                                 |  | Land – Farms |         |   | Buildings and improvements |  |        | Opening of area |  |  | Total in operation |   |  | Construction in progress |          |   | 2018 |  | 2017   |  
|------------------------------------------------ |  | ------------ | ------- | - | -------------------------- |  | ------ | --------------- |  |  | ------------------ | - |  | ------------------------ | -------- | - | ---- |  | ------ | -
|                                                 |  |              |         |   |                            |  |        |                 |  |  |                    |   |  |                          |          |   |      |  |        |  
|Opening balance                                  |  |              | 300,487 |   |                            |  | 26,369 |                 |  |  | 53,021             |   |  |                          | 379,877  |   |      |  | 9,922  |  
|Acquisitions                                     |  |              | 2,231   |   |                            |  | 152    |                 |  |  | 1,390              |   |  |                          | 3,773    |   |      |  | 20,088 |  
|Acquisitions – corporate restructuring           |  |              | 113,158 |   |                            |  | 4,141  |                 |  |  | —                  |   |  |                          | 117,299  |   |      |  | 23,653 |  
|Disposals                                        |  |              | (10,676 | ) |                            |  | (116   | )               |  |  | —                  |   |  |                          | (10,792  | ) |      |  | (1     | )
|Transfers                                        |  |              | —       |   |                            |  | 1,979  |                 |  |  | 6,943              |   |  |                          | 8,922    |   |      |  | (8,922 | )
|(-) Depreciation / amortization                  |  |              | —       |   |                            |  | (983   | )               |  |  | (11,916            | ) |  |                          | (12,899  | ) |      |  | —      |  
|Effect of conversion                             |  |              | 19,879  |   |                            |  | 710    |                 |  |  | 36                 |   |  |                          | 20,625   |   |      |  | 5,607  |  
|Net book balance                                 |  |              | 425,079 |   |                            |  | 32,252 |                 |  |  | 49,474             |   |  |                          | 506,805  |   |      |  | 50,347 |  
|                                                 |  |              |         |   |                            |  |        |                 |  |  |                    |   |  |                          |          |   |      |  |        |  
|At June 30, 2018                                 |  |              |         |   |                            |  |        |                 |  |  |                    |   |  |                          |          |   |      |  |        |  
|Total cost                                       |  |              | 425,079 |   |                            |  | 39,925 |                 |  |  | 145,397            |   |  |                          | 610,401  |   |      |  | 50,347 |  
|Accumulated depreciation                         |  |              | —       |   |                            |  | (7,673 | )               |  |  | (95,923            | ) |  |                          | (103,596 | ) |      |  | —      |  
|Net book balance                                 |  |              | 425,079 |   |                            |  | 32,252 |                 |  |  | 49,474             |   |  |                          | 506,805  |   |      |  | 50,347 |  
|Annual depreciation rates (weighted average) - % |  |              | —       |   |                            |  | 4-20   |                 |  |  | 10-20              |   |  |                          | —        |   |      |  | —      |  



Four farms
owned by the Company are held as guarantee for loans and financing according to Note 15, representing 33% of total investment properties.
The fair values of the investment properties are as follows:



|             |  |                   |  | Hectares  |         |           |  |             |  | Fair value*             |  | Cost value | 
|------------ |  | ----------------- |  | --------- | ------- | --------- |  | ----------- |  | ----------------------- |  | ---------- | 
|Farm         |  | State             |  | 6/30/2018 |         | 6/30/2016 |  | Real estate |  | Acquisition             |  | 6/30/2018  | 
|             |  |                   |  |           |         |           |  |             |  |                         |  |            | 
|Jatobá       |  | Bahia             |  |           | 30,981  |           |  | 30,981      |  | Jaborandi Ltda          |  | Mar-07     | 
|Alto Taquari |  | Mato Grosso       |  |           | 5,394   |           |  | 5,394       |  | Mogno Ltda              |  | Aug-07     | 
|Araucária    |  | Goiás             |  |           | 5,534   |           |  | 6,493       |  | Araucária Ltda          |  | Apr-07     | 
|Chaparral    |  | Bahia             |  |           | 37,182  |           |  | 37,184      |  | Cajueiro Ltda           |  | Nov-07     | 
|Nova Buriti  |  | Minas Gerais      |  |           | 24,212  |           |  | 24,212      |  | Flamboyant Ltda         |  | Dec-07     | 
|Preferência  |  | Bahia             |  |           | 17,799  |           |  | 17,799      |  | Cajueiro Ltda           |  | Sep-08     | 
|São José     |  | Maranhão          |  |           | 17,566  |           |  | 17,566      |  | Ceibo Ltda              |  | Feb-17     | 
|Moroti (a)   |  | Boqueron Paraguay |  |           | 59,490  |           |  | —           |  | Agropecuaria Moroti S/A |  | Feb-18     | 
|             |  |                   |  |           | 198,158 |           |  | 139,629     |  |                         |  |            | 



(*) Considered Level 3 for fair
value.



(a) Property consolidated during
the Cresca spin-off process, see Note 1.1.



At June 30, 2018, the cost value
of R$541,898 (R$384,853 at June 30, 2017) is not comparable to that disclosed in the “Investment properties” note,
since the note contemplates Avarandado Farm (leased), which is not an integral part of the Company’s portfolio of owned farms.



| | 11. | Investments
| | --- | -----------



| | a) | Changes in investments
| | -- | ----------------------



|At June 30, 2016                            |  |  | 102,955  |  
|------------------------------------------- |  |  | -------- | -
|Share of loss in a joint venture            |  |  | (4,425   | )
|Effect from currency translation adjustment |  |  | 2,896    |  
|Balance at June 30, 2017                    |  |  | 101,426  |  
|Write-off of investment due to spin-off     |  |  | (115,478 | )
|Share of profit in a joint venture          |  |  | 14,671   |  
|Effect from currency translation adjustment |  |  | (533     | )
|Balance at June 30, 2018                    |  |  | 86       |  



F-43







BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



| | b) | Interest in Joint Venture
| | -- | -------------------------



Cresca’s summarized financial
information, based on the financial statements prepared in accordance with IFRS as of and for years ended June 30, 2018 and 2017
and the reconciliation with the book value of the investment in the consolidated financial statements considering the fair value
adjustments on the acquisition date are presented below:



|                                                         |  | 2018(*) |       |   | 2017 | 
|-------------------------------------------------------- |  | ------- | ----- | - | ---- | 
|Assets                                                   |  |         | 3,371 |   |      | 
|Current                                                  |  |         | 3,356 |   |      | 
|Cash and cash equivalents                                |  |         | 333   |   |      | 
|Accounts receivable, inventories and other receivables   |  |         | 3,023 |   |      | 
|Contract of purchase of land                             |  |         | —     |   |      | 
|                                                         |  |         |       |   |      | 
|Noncurrent                                               |  |         | 15    |   |      | 
|Recoverable taxes                                        |  |         | —     |   |      | 
|Investment properties                                    |  |         | —     |   |      | 
|Other noncurrent                                         |  |         | 15    |   |      | 
|                                                         |  |         |       |   |      | 
|Liabilities                                              |  |         | 3,200 |   |      | 
|Current                                                  |  |         | 3,200 |   |      | 
|Trade payables, taxes and loans                          |  |         | 3,200 |   |      | 
|Noncurrent                                               |  |         | —     |   |      | 
|Including taxes and loans                                |  |         | —     |   |      | 
|Total net assets                                         |  |         | 171   |   |      | 
|Company’s interest – 50%                                 |  |         | 50    | % |      | 
|Company’s interest in net assets at estimated fair value |  |         | 86    |   |      | 
|                                                         |  |         |       |   |      | 

|                                                                                 |  | 2018 |        |   | 2017 | 
|-------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | 
|Revenue                                                                          |  |      | 83     |   |      | 
|Cost of products sold                                                            |  |      | (684   | ) |      | 
|Gross revenue (expenses)                                                         |  |      | (601   | ) |      | 
|Selling expenses                                                                 |  |      | (34    | ) |      | 
|Administrative expenses                                                          |  |      | (374   | ) |      | 
|Other profit/expenses                                                            |  |      | 437    |   |      | 
|Finance profit                                                                   |  |      | 32,340 |   |      | 
|Finance costs                                                                    |  |      | 16     |   |      | 
|Loss before tax                                                                  |  |      | 31,784 |   |      | 
|Income and social contribution taxes                                             |  |      | (2,443 | ) |      | 
|Loss for the year                                                                |  |      | 29,341 |   |      | 
|Company’s interest – 50%                                                         |  |      | 14,671 |   |      | 
|Amortization of fair value adjustment on the purchase date (shareholders’ loans) |  |      | —      |   |      | 
|Equity method                                                                    |  |      | 14,671 |   |      | 



(*) Balance sheet after spin-off
that took place on February 9, 2018, as described in Note 1.1.



F-44









BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



| | 12. | Property, plant and equipment
| | --- | -----------------------------



|                                                 |  | Buildings and improvements |      |   | Equipment and facilities |  |        | Agricultural vehicles and machinery |  |  | Furniture and fixtures |   |  | Total in operation |       |   | Construction in progress |  |         | Sugarcane |  |  | Total property, plant and equipment |  
|------------------------------------------------ |  | -------------------------- | ---- | - | ------------------------ |  | ------ | ----------------------------------- |  |  | ---------------------- | - |  | ------------------ | ----- | - | ------------------------ |  | ------- | --------- |  |  | ----------------------------------- | -
|At June 30, 2017                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|Opening balance                                  |  |                            | 28   |   |                          |  | 1,858  |                                     |  |  | 6,182                  |   |  |                    | 495   |   |                          |  | 8,563   |           |  |  | 4                                   |  
|Acquisitions (a)                                 |  |                            | —    |   |                          |  | 687    |                                     |  |  | 2,633                  |   |  |                    | 108   |   |                          |  | 3,428   |           |  |  | 340                                 |  
|Disposals                                        |  |                            | —    |   |                          |  | (129   | )                                   |  |  | (324                   | ) |  |                    | (3    | ) |                          |  | (456    | )         |  |  | —                                   |  
|Transfers                                        |  |                            | 169  |   |                          |  | 116    |                                     |  |  | —                      |   |  |                    | —     |   |                          |  | 285     |           |  |  | (285                                | )
|Depreciation                                     |  |                            | (5   | ) |                          |  | (321   | )                                   |  |  | (755                   | ) |  |                    | (95   | ) |                          |  | (1,176  | )         |  |  | —                                   |  
|Accounting balance, net                          |  |                            | 192  |   |                          |  | 2,211  |                                     |  |  | 7,736                  |   |  |                    | 505   |   |                          |  | 10,644  |           |  |  | 59                                  |  
|                                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|At June 30, 2017                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|Total cost                                       |  |                            | 921  |   |                          |  | 5,473  |                                     |  |  | 20,752                 |   |  |                    | 1,254 |   |                          |  | 28,400  |           |  |  | 59                                  |  
|Accumulated depreciation                         |  |                            | (729 | ) |                          |  | (3,262 | )                                   |  |  | (13,016                | ) |  |                    | (749  | ) |                          |  | (17,756 | )         |  |  | —                                   |  
|Accounting balance, net                          |  |                            | 192  |   |                          |  | 2,211  |                                     |  |  | 7,736                  |   |  |                    | 505   |   |                          |  | 10,644  |           |  |  | 59                                  |  
|                                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|At June 30, 2018                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|Opening balance                                  |  |                            | 192  |   |                          |  | 2,211  |                                     |  |  | 7,736                  |   |  |                    | 505   |   |                          |  | 10,644  |           |  |  | 59                                  |  
|Acquisitions (a)                                 |  |                            | 10   |   |                          |  | 5,458  |                                     |  |  | 4,634                  |   |  |                    | 318   |   |                          |  | 10,420  |           |  |  | 52                                  |  
|Acquisitions – corporate restructuring           |  |                            | —    |   |                          |  | 215    |                                     |  |  | 74                     |   |  |                    | 55    |   |                          |  | 344     |           |  |  | —                                   |  
|Disposals                                        |  |                            | —    |   |                          |  | (55    | )                                   |  |  | (235                   | ) |  |                    | (6    | ) |                          |  | (296    | )         |  |  | —                                   |  
|Depreciation                                     |  |                            | (5   | ) |                          |  | (856   | )                                   |  |  | (1,214                 | ) |  |                    | (110  | ) |                          |  | (2,185  | )         |  |  | —                                   |  
|Accounting balance, net                          |  |                            | 197  |   |                          |  | 6,973  |                                     |  |  | 10,995                 |   |  |                    | 762   |   |                          |  | 18,927  |           |  |  | 111                                 |  
|                                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|At June 30, 2018                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|Total cost                                       |  |                            | 931  |   |                          |  | 11,091 |                                     |  |  | 25,225                 |   |  |                    | 1,621 |   |                          |  | 38,868  |           |  |  | 111                                 |  
|Accumulated depreciation                         |  |                            | (734 | ) |                          |  | (4,118 | )                                   |  |  | (14,230                | ) |  |                    | (859  | ) |                          |  | (19,941 | )         |  |  | —                                   |  
|Accounting balance, net                          |  |                            | 197  |   |                          |  | 6,973  |                                     |  |  | 10,995                 |   |  |                    | 762   |   |                          |  | 18,927  |           |  |  | 111                                 |  
|                                                 |  |                            |      |   |                          |  |        |                                     |  |  |                        |   |  |                    |       |   |                          |  |         |           |  |  |                                     |  
|Annual depreciation rates (weighted average) - % |  |                            | 2-20 |   |                          |  | 10     |                                     |  |  | 13-20                  |   |  |                    | 10    |   |                          |  |         |           |  |  |                                     |  



| | 13. | Payables for purchase of farms
| | --- | ------------------------------



|                     |  | Restatement index |  |  | 2018 |   |  | 2017 | 
|-------------------- |  | ----------------- |  |  | ---- | - |  | ---- | 
|                     |  |                   |  |  |      |   |  |      | 
|Nova Buriti Farm (a) |  | *IGP-M            |  |  |      | — |  |      | 
|São José Farm        |  | —                 |  |  |      | — |  |      | 
|                     |  |                   |  |  |      | — |  |      | 



* IGP-M
–Market General Price Index



|a) | On August 30, 2017, the total debt was R$22,126, when the deed of Nova Buriti farm was prepared
and consequently a partial amount for the farm was paid in the amount of R$5,802. Of the remaining balance, R$1,500 was paid on
October 18, 2017, R$3,665 was paid on January 10, 2018, and R$1,886 was paid on May 29, 2018. During the negotiation, the total
price of the farm was renegociated, fully waiving inflation adjustment (IGP-M – General Market Price Index), which would
be payable by the Company. The amount of R$9,273 was recognized as financial income in the quarter ended September 30, 2017, see
Note 23.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The payments related to the purchase
of the farms are linked to the fulfillment of certain conditions precedent by the sellers for the obtaining of licenses.



| | 14. | Trade accounts payable and others
| | --- | ---------------------------------



|                       |  | Note |      |  | 2018 |  |         | 2017 | 
|---------------------- |  | ---- | ---- |  | ---- |  | ------- | ---- | 
|                       |  |      |      |  |      |  |         |      | 
|Trade accounts payable |  |      | 14.1 |  |      |  | 48,518  |      | 
|Taxes payable          |  |      |      |  |      |  | 6,142   |      | 
|Dividends payable      |  |      |      |  |      |  | 30,008  |      | 
|Advances to customers  |  |      |      |  |      |  | 21,201  |      | 
|Other liabilities      |  |      |      |  |      |  | 576     |      | 
|Total current          |  |      |      |  |      |  | 106,445 |      | 
|                       |  |      |      |  |      |  |         |      | 
|Taxes payable          |  |      |      |  |      |  | 11,298  |      | 
|Total noncurrent       |  |      |      |  |      |  | 11,298  |      | 



| | 14.1 | Trade accounts payable
| | ---- | ----------------------



At June 30, 2018, the Company’s
balance of trade accounts payable is as follows:



|                                                |  | 2018 |        |  | 2017 | 
|----------------------------------------------- |  | ---- | ------ |  | ---- | 
|Raw materials and services                      |  |      | 25,859 |  |      | 
|Operating lease transactions with third parties |  |      | 22,659 |  |      | 
|                                                |  |      | 48,518 |  |      | 



F-45







BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



| | 15. | Loans, financing, debentures and finance leases
| | --- | -----------------------------------------------



|                                                  |  | Bank                                          |  | Final Maturity |  | Annual interest rates and charges -% |  | Guarantee                          |  | 2018 |         |  | 2017 | 
|------------------------------------------------- |  | --------------------------------------------- |  | -------------- |  | ------------------------------------ |  | ---------------------------------- |  | ---- | ------- |  | ---- | 
|Current                                           |  |                                               |  |                |  |                                      |  |                                    |  |      |         |  |      | 
|Financing for agricultural costs                  |  | ABC and Itaú                                  |  | September/18   |  | Fixed rate 7.22% to 9%               |  | —                                  |  |      | 31,847  |  |      | 
|Financing for agricultural costs (USD)            |  | Itaú                                          |  | November/18    |  | Fixed rate 7.22%                     |  | —                                  |  |      | 11,486  |  |      | 
|Bahia Project Financing (a)                       |  | BNB and HSBC                                  |  | June/19        |  | Fixed rate 4% to 9%                  |  | Jatobá and Chaparral Farms         |  |      | 3,131   |  |      | 
|Working Capital Financing                         |  | Rabobank                                      |  | May/18         |  | 1.40% to 2.30% +  100% of CDI        |  | —                                  |  |      | —       |  |      | 
|Working Capital Financing (USD) (a)               |  | Itaú                                          |  | August/17      |  | 3.49%                                |  | —                                  |  |      | —       |  |      | 
|Financing of Machinery and Equipment - FINAME     |  | Rabobank and Itaú                             |  | June/19        |  | TJLP + 3.73% Fixed rate 9% to 11%    |  | Machinery and Equipment            |  |      | 630     |  |      | 
|Financing of sugarcane                            |  | Itaú, Rabobank, Banco do Brasil and Santander |  | June/19        |  | TJLP + 2.70 Fixed rate 9% to 10%     |  | Morro Vermelho and Chaparral Farms |  |      | 21,318  |  |      | 
|Finance lease sugarcane crop (Note 26.c)          |  | Partnership III                               |  | November/18    |  | 6.62%                                |  |                                    |  |      | 1,676   |  |      | 
|                                                  |  |                                               |  |                |  |                                      |  |                                    |  |      | 70,088  |  |      | 
|                                                  |  |                                               |  |                |  |                                      |  |                                    |  |      |         |  |      | 
|Noncurrent                                        |  |                                               |  |                |  |                                      |  |                                    |  |      |         |  |      | 
|Financing  Bahia Project (a)                      |  | BNB and HSBC                                  |  | August/23      |  | Fixed rate 4% to 9%                  |  | Jatobá and Chaparral Farms         |  |      | 27,146  |  |      | 
|Financing of Machinery and Equipment - FINAME     |  | Rabobank and Itaú                             |  | June/24        |  | TJLP + 3.73% Fixed rate 9% to 11%    |  | Machinery and Equipment            |  |      | 5,411   |  |      | 
|Financing of sugarcane                            |  | Itaú, Rabobank, Banco do Brasil and Santander |  | December/23    |  | TJLP + 2.70 Fixed rate 9% to 10%     |  | Morro Vermelho and Chaparral Farms |  |      | 13,194  |  |      | 
|Debentures                                        |  | Insurance company                             |  | July/23        |  | 106.5% and 110% of CDI               |  | Chaparral Farm                     |  |      | 141,642 |  |      | 
|Finance lease sugarcane crop (Note 26.c)          |  | Partnership III                               |  | November/18    |  | 6.62%                                |  | —                                  |  |      | —       |  |      | 
|Finance lease sugarcane crop (Notes 1.1 and 26.d) |  | Partnership IV                                |  | January/32     |  | R$/Kg 0.6462                         |  | —                                  |  |      | 18,539  |  |      | 
|                                                  |  |                                               |  |                |  |                                      |  |                                    |  |      | 205,932 |  |      | 
|                                                  |  |                                               |  |                |  |                                      |  |                                    |  |      | 276,020 |  |      | 



Keys:



TJLP – Long Term Interest
Rate



FINAME – Financing of Machinery
and Equipment (BNDES)



BNDES – Brazilian Development
Bank



BNB – Banco do Nordeste



Changes in loans and financing
during the year ended June 30, 2018 are as follows:



|                                                 |  | June 30, 2016 |        |  | Contracting |  |        | Payment of principal |  |  | Payment of Interest |   |  | Appropriation of interest |        |   | Foreign exchange difference |  |       | Present value adjustment |  |  | June 30, 2017 | 
|------------------------------------------------ |  | ------------- | ------ |  | ----------- |  | ------ | -------------------- |  |  | ------------------- | - |  | ------------------------- | ------ | - | --------------------------- |  | ----- | ------------------------ |  |  | ------------- | 
|Finance for agricultural cost                    |  |               | 35,087 |  |             |  | 10,000 |                      |  |  | (34,826             | ) |  |                           | (2,085 | ) |                             |  | 2,527 |                          |  |  | —             | 
|Bahia Project(a) Financing                       |  |               | 57,099 |  |             |  | 1,607  |                      |  |  | (13,131             | ) |  |                           | (3,954 | ) |                             |  | 4,477 |                          |  |  | —             | 
|Working Capital Financing                        |  |               | —      |  |             |  | 15,000 |                      |  |  | —                   |   |  |                           | (106   | ) |                             |  | 888   |                          |  |  | —             | 
|Working Capital (USD) Financing                  |  |               | —      |  |             |  | 4,661  |                      |  |  | —                   |   |  |                           | —      |   |                             |  | 94    |                          |  |  | 276           | 
|Financing of Machinery and Equipment – FINAME    |  |               | 114    |  |             |  | 1,201  |                      |  |  | (109                | ) |  |                           | (5     | ) |                             |  | 8     |                          |  |  | —             | 
|Sugarcane Financing                              |  |               | 1,772  |  |             |  | 7,000  |                      |  |  | (242                | ) |  |                           | (177   | ) |                             |  | 920   |                          |  |  | —             | 
|Finance Lease - Sugarcane Crop - Partnership III |  |               | 5,773  |  |             |  | —      |                      |  |  | —                   |   |  |                           | —      |   |                             |  | —     |                          |  |  | —             | 
|Finance lease sugarcane crop                     |  |               | —      |  |             |  | 29,049 |                      |  |  | —                   |   |  |                           | —      |   |                             |  | —     |                          |  |  | —             | 
|                                                 |  |               | 99,845 |  |             |  | 68,518 |                      |  |  | (48,308             | ) |  |                           | (6,327 | ) |                             |  | 8,914 |                          |  |  | 276           | 



F-46







|                                                 |  | June 30, 2017 |         |  | Contracting |  |         | Payment of principal |  |  | Payment of Interest |   |  | Appropriation of interest |         |   | Foreign exchange difference |  |        | Present value adjustment |  |  | June 30, 2018 |  
|------------------------------------------------ |  | ------------- | ------- |  | ----------- |  | ------- | -------------------- |  |  | ------------------- | - |  | ------------------------- | ------- | - | --------------------------- |  | ------ | ------------------------ |  |  | ------------- | -
|Finance for agricultural cost                    |  |               | 10,703  |  |             |  | 62,734  |                      |  |  | (34,062             | ) |  |                           | (1,447  | ) |                             |  | 4,003  |                          |  |  | 1,402         |  
|Bahia Project Financing (a)                      |  |               | 46,098  |  |             |  | 13,904  |                      |  |  | (27,622             | ) |  |                           | (4,706  | ) |                             |  | 2,603  |                          |  |  | —             |  
|Working Capital Financing                        |  |               | 15,782  |  |             |  | 16,250  |                      |  |  | (31,523             | ) |  |                           | (1,893  | ) |                             |  | 1,384  |                          |  |  | —             |  
|Working Capital (USD) Financing                  |  |               | 5,031   |  |             |  | —       |                      |  |  | (4,703              | ) |  |                           | (83     | ) |                             |  | 18     |                          |  |  | (263          | )
|Financing of Machinery and Equipment – FINAME    |  |               | 1,209   |  |             |  | 4,700   |                      |  |  | —                   |   |  |                           | (404    | ) |                             |  | 461    |                          |  |  | 75            |  
|Sugarcane Financing                              |  |               | 9,273   |  |             |  | 32,557  |                      |  |  | (7,498              | ) |  |                           | (1,814  | ) |                             |  | 1,994  |                          |  |  | —             |  
|Debentures                                       |  |               | —       |  |             |  | 140,165 |                      |  |  | —                   |   |  |                           | —       |   |                             |  | 1,477  |                          |  |  | —             |  
|Finance Lease - Sugarcane Crop - Partnership III |  |               | 3,284   |  |             |  | —       |                      |  |  | —                   |   |  |                           | —       |   |                             |  | —      |                          |  |  | —             |  
|Finance lease sugarcane crop                     |  |               | 20,795  |  |             |  | —       |                      |  |  | —                   |   |  |                           | —       |   |                             |  | —      |                          |  |  | —             |  
|                                                 |  |               | 112,175 |  |             |  | 270,310 |                      |  |  | (105,408            | ) |  |                           | (10,347 | ) |                             |  | 11,940 |                          |  |  | 1,214         |  



| | (a) | Financing to raise funds for opening of areas and improvements
in Jatobá and Chaparral farms.
| | --- | ---------------------------------------------------------------------------------------------



BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



| | a) | Loans and Financing
| | -- | -------------------



Covenants



All
loans and financing contracts above are in Reais and have specific terms and conditions defined in the respective contracts with
governmental economic and development agencies that directly or indirectly grant those loans. At June 30, 2018 and 2017, the Company’s
financing had no financial covenants, but rather only operating clauses, on which the Company is not in default.



| | b) | Debentures
| | -- | ----------



On May 25, 2018, one hundred
forty-two thousand, two hundred (142,200) non-convertible debentures were subscribed to and paid in, with security interest, in
the total of R$142,200 (R$85,200 for the first series and R$57,000 for the second series).



The maturity date of the first-series
debentures is August 1, 2022 (“maturity date of the first series”) and their unit face value will be paid in three
(3) annual installments, the first on July 30, 2020 and the final on the maturity date of the first series. Compensatory interest
corresponding to one hundred six point fifty percent (106,50%) of the DI rate will be accrued on the unit face value of first-series
debentures, which will be paid on July 30 of each year or on the maturity date of the first series. The maturity date of the second-series
debentures is July 31, 2023 (“maturity date of the second series”) and their unit face value will be paid in four (4)
annual installments, the first on July 30, 2020 and the final on the maturity date of the second series. Compensatory interest
corresponding to one hundred ten percent (110.00%) of the CDI (Interbank Deposit Certificate) rate will be accrued on the unit
face value of second-series debentures, which will be paid on July 30 of each year or on the maturity date of the second series.



The costs directly related to
the issue of debentures totaled R$2,035 and will be amortized during the term of the agreement.



The Debentures were linked to
a securitization transaction, serving as guarantee for the issue of Certificates of Agribusiness Receivables (“CRA”)
pursuant to Law 11,076/2004 and CVM Instruction 414/2004, which were the object of a public distribution offer with restricted
efforts, under CVM Instruction 476/2009 (“Restricted Offer”).



The Debentures are backed by
security interest in the form of fiduciary sale of properties owned by the Company and registered under no. 6,254, 6,267 and 6,405,
all of them at the Property Records Office of Correntina in the state of Bahia.



Covenants



The debentures have covenants
related to the maintenance of certain financial indicators, based on the ratio of net debt to fair value of investiment properties. Failure
by the Company to attain these indicators during the term of the debentures may entail advance maturity of the debt.



On June 30, 2018, the Company
is in compliance with the covenants described above.



F-47







BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



|16. | Income and social contribution taxes
|--- | ------------------------------------



16.1. Deferred taxes



Deferred income and social contribution
tax assets and liabilities are offset when there is a legal right to offset tax credits against tax liabilities, and provided that
they refer to the same tax authority and the same legal entity.





The fiscal year for income tax
and social contribution calculation purposes is calendar year, which is different from that adopted by the Company for the preparation
of its consolidated financial statements, which ends June 30 of each year.



The changes in deferred income
tax and social contribution tax assets and liabilities for the periods ended June 30, 2018 and 2017 and without taking into
consideration offsetting of balances in the same tax jurisdiction, are as follows:



|                                                          |  | 2018 |        |  | 2017 | 
|--------------------------------------------------------- |  | ---- | ------ |  | ---- | 
|Assets                                                    |  |      |        |  |      | 
|Noncurrent                                                |  |      |        |  |      | 
|Tax loss carryforwards (NOL)                              |  |      | 43,442 |  |      | 
|Biological assets                                         |  |      | 5,942  |  |      | 
|Financial lease                                           |  |      | 2,103  |  |      | 
|Contingency, bonuses and fair value                       |  |      | 11,125 |  |      | 
|Hedge                                                     |  |      | 364    |  |      | 
|Provision for doubtful acoorents                          |  |      | 668    |  |      | 
|Difference in cost of farms                               |  |      | 170    |  |      | 
|Provision of other accounts payable and receivable        |  |      | 1,794  |  |      | 
|                                                          |  |      | 65,608 |  |      | 
|Liabilities                                               |  |      |        |  |      | 
|Noncurrent                                                |  |      |        |  |      | 
|Biological assets                                         |  |      | 13,386 |  |      | 
|Finance lease                                             |  |      | 548    |  |      | 
|Contingency, bonuses and fair value                       |  |      | 3,574  |  |      | 
|Surplus on investment                                     |  |      | 1,733  |  |      | 
|Costs of transactions                                     |  |      | 499    |  |      | 
|Provision of residual value and useful life of PPE assets |  |      | 1,633  |  |      | 
|Accelerated depreciation of assets for rural activity     |  |      | 11,493 |  |      | 
|                                                          |  |      | 32,866 |  |      | 
|                                                          |  |      |        |  |      | 
|Net balance                                               |  |      | 32,742 |  |      | 



The net change in deferred income
tax is as follows:



|At June 30, 2016                                           |  |  | 55,594  |  
|---------------------------------------------------------- |  |  | ------- | -
|Tax losses                                                 |  |  | (4,820  | )
|Adjustments in biological assets and agricultural products |  |  | 2,182   |  
|Provisions for contingency and fair value                  |  |  | (2,043  | )
|Hedge                                                      |  |  | (192    | )
|Allowance for doubtful accounts                            |  |  | 176     |  
|Onerous agreements                                         |  |  | 2,918   |  
|Accelerated depreciation                                   |  |  | (35     | )
|At June 30, 2017                                           |  |  | 53,780  |  
|Tax losses                                                 |  |  | (15,016 | )
|Adjustments in biological assets and agricultural products |  |  | (7,543  | )
|Financial lease                                            |  |  | 1,555   |  
|Provisions for contingency and fair value                  |  |  | 1,389   |  
|Hedge                                                      |  |  | (271    | )
|Surplus on investment (Note 1.1)                           |  |  | (1,733  | )
|Costs of transactions                                      |  |  | (499    | )
|Allowance for doubtful accounts                            |  |  | 44      |  
|Provision for other accounts payable and receivable        |  |  | (1,124  | )
|Accelerated depreciation                                   |  |  | 2,154   |  
|Total without effect from conversion                       |  |  | 32,736  |  
|                                                           |  |  |         |  
|Effect of conversion                                       |  |  | 6       |  
|                                                           |  |  |         |  
|At June 30, 2018                                           |  |  | 32,742  |  



F-48







BrasilAgro
– Companhia Brasileira de Propriedades Agrícolas

Notes
to the financial statements



June
30, 2018

(In
thousands of reais, except as stated otherwise)



The estimated years of realization
of deferred tax assets are as follows:



|             |  |  | 2018 |       
|------------ |  |  | ---- | ------
|2019         |  |  |      | 20,721
|2020         |  |  |      | 1,973 
|2021         |  |  |      | 1,935 
|2022         |  |  |      | 2,370 
|2023 to 2028 |  |  |      | 38,609
|             |  |  |      | 65,608



| | 16.2. | Income and social contribution tax expenses
| | ----- | -------------------------------------------



|                                                                                               |  | 2018 |         |   | 2017 |  |         | 2016 | 
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- | 
|Income before income and social contribution taxes                                             |  |      | 152,257 |   |      |  | 33,259  |      | 
|Combined nominal rate of income tax and social contribution taxes – %                          |  |      | 34      | % |      |  | 34      | %    | 
|                                                                                               |  |      | (51,767 | ) |      |  | (11,308 | )    | 
|                                                                                               |  |      |         |   |      |  |         |      | 
|Share of loss in a Joint Venture                                                               |  |      | 4,988   |   |      |  | (1,504  | )    | 
|Management bonus                                                                               |  |      | (2,331  | ) |      |  | (2,025  | )    | 
|Share-based incentive plan - ILPA                                                              |  |      | (208    | ) |      |  | —       |      | 
|Nondeductible expenses                                                                         |  |      | (135    | ) |      |  | (709    | )    | 
|Profit or loss of joint venture abroad                                                         |  |      | —       |   |      |  | (378    | )    | 
|Net effect of subsidiaries taxed whose profit is computed as a percentage of gross revenue (*) |  |      | 19,121  |   |      |  | 10,320  |      | 
|Net effect of spin-off of joint venture abroad (Note 1.1)                                      |  |      | 4,778   |   |      |  | —       |      | 
|Other permanent addition                                                                       |  |      | (365    | ) |      |  | (345    | )    | 
|                                                                                               |  |      |         |   |      |  |         |      | 
|Income and social contribution taxes for the year                                              |  |      | (25,919 | ) |      |  | (5,949  | )    | 
|                                                                                               |  |      |         |   |      |  |         |      | 
|Current                                                                                        |  |      | (4,875  | ) |      |  | (4,135  | )    | 
|Deferred                                                                                       |  |      | (21,044 | ) |      |  | (1,814  | )    | 
|                                                                                               |  |      |         |   |      |  |         |      | 
|                                                                                               |  |      | (25,919 | ) |      |  | (5,949  | )    | 
|Effective tax rate                                                                             |  |      | -17     | % |      |  | -18     | %    | 



|(*) | For some of our real estate subsidiaries, profit tax is measured based on the regime whereby profit
is computed as a percentage of gross revenue, i.e., income tax is determined on a simplified base to calculate the taxable profit
(32% for lease revenues, 8% for sale of farms and 100% for other earnings). This results effectively in taxing the profit of subsidiaries
at a rate lower than if taxable income were based on accounting records.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 17. | Equity
| | --- | ------



| | a) | Capital (number of shares)
| | -- | --------------------------



|Shareholder                                          |  | 2018 |            |  | 2017 | 
|---------------------------------------------------- |  | ---- | ---------- |  | ---- | 
|                                                     |  |      |            |  |      | 
|Cresud S.A.C.I.F.Y.A. (a)                            |  |      | 23,291,500 |  |      | 
|Board of Directors                                   |  |      | 8,431,700  |  |      | 
|Executive Board                                      |  |      | 168,267    |  |      | 
|Officers                                             |  |      | 8,599,967  |  |      | 
|Treasury                                             |  |      | 3,086,748  |  |      | 
|Other                                                |  |      | 21,910,701 |  |      | 
|Total shares of paid-up capital                      |  |      | 56,888,916 |  |      | 
|Total outstanding shares                             |  |      | 21,910,701 |  |      | 
|Outstanding shares as percentage of total shares (%) |  |      | 39         |  |      | 
|                                                     |  |      |            |  |      | 

| | (a) | Of this amount, 140,450 shares are held by Agro Managers S.A. and 1,000 shares are held by Agro Managers,
subsidiaries of Cresud S.A.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



At June 30, 2018 and 2017,
the Company’s subscribed and paid-up capital amounted to R$584,224. The Company is authorized to increase its capital, regardless
of amendments to the articles of incorporation, up to the limit of R$3,000,000, as decided by the Board of Directors.



F-49









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





| | b) | Stock option plan
| | -- | -----------------



The
information on the stock option plan and issue of new grants is described in Note 21.



| | c) | Legal reserve and retention for investment and expansion
| | -- | --------------------------------------------------------



Pursuant
to article 193 of Law No. 6404/76 and article 36, item (a), 5% (five per cent) of the Company’s net income at the end
of each year must, before any other allocation, be used to set up a legal reserve, which shall not exceed 20% (twenty percent)
of capital.



The
Company is allowed not to set up the legal reserve for the financial year in which the reserve balance, plus the amount of capital
reserve addressed in item 1, of article 182, of Law No. 6404/76, exceeds 30% (thirty per cent) of capital. The legal reserve
aims at assuring the integrity of the Company’s capital and may only be used to offset loss and increase capital.



According to article 36, item
(c), of the Company’s articles of incorporation and article 196 of Law No. 6404/76, the Company may allocate the remaining
portion of adjusted net income for the year ended, to reserve for investment and expansion, subject to approval on the General
Shareholders’ Meeting.



The balance of the retained
profits reserve, except for the reserves of unrealized profit and reserves for contingencies, may not exceed the amount of capital.
Once this maximum limit is reached, the General Meeting may resolve on the investment of the exceeding portion in the payment,
increase of capital or in dividend distribution.



| | d) | Dividends
| | -- | ---------



Pursuant to article 36, of the
Company’s Articles of Incorporation, profit for the year shall be allocated as follows: (a) 5% (five percent) of net profit
for the set-up of legal reserve, up to the limit of 20% (twenty percent) of share capital ; (b) 25% (twenty five percent) of adjusted
net profit, after the deduction addressed in item (a) above, shall be allocated to the payment of mandatory dividends and (iii)
the remaining portion of adjusted net profit, after the deduction addressed in item (b) above, may be allocated to the reserve
for investment and expansion.



|                                                             |  | 2018 |         |   | 2017 | 
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | 
|Profit for the year (a)                                      |  |      | 126,338 |   |      | 
|(-) Constitution of legal reserve (5% of net profit)         |  |      | (6,317  | ) |      | 
|Adjusted net profit                                          |  |      | 120,021 |   |      | 
|                                                             |  |      |         |   |      | 
|(-) Mandatory minimum dividends - 25% of adjusted net profit |  |      | (30,005 | ) |      | 
|(-) Additional dividends proposed                            |  |      | (10,995 | ) |      | 
|                                                             |  |      |         |   |      | 
|Proposed dividends                                           |  |      | (41,000 | ) |      | 
|                                                             |  |      |         |   |      | 
|Set-up of reserve for investments and expansion              |  |      | 79,021  |   |      | 
|                                                             |  |      |         |   |      | 
|Total paid-in capital (per thousand shares)                  |  |      | 56,889  |   |      | 
|(-) Treasury shares (per thousand shares)                    |  |      | (3,087  | ) |      | 
|(=) Free float (per thousand shares)                         |  |      | 53,802  |   |      | 
|                                                             |  |      |         |   |      | 
|Dividend per share (R$)                                      |  |      | 0.76    |   |      | 





F-50









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





At
June 30, 2018, the total of R$30,005 was allocated as mandatory minimum dividends and R$10,995 as additional dividends proposed,
to be approved at the Annual Shareholders’ Meeting.



On October 16, 2018, the Company
approved the distribution of dividends at the Extraordinary Shareholders’ Meeting, in the amount of R$41,000.



On October 2, 2017, the shareholders
of the Company approved at the Annual Shareholders’ Meeting the distribution of dividends in the amount of R$12,972, of which
R$6,486 refers to mandatory minimum dividends and R$6,486 to additional dividends proposed.



| | e) | Other comprehensive income
| | -- | --------------------------



At June 30, 2018, the effects
from foreign exchange rate differences arising from the translation of Cresca, Palmeiras and Moroti financial statements for the
year amounted to positive R$27,084 (R$3,410 at June 30, 2017 and R$27,865 at June 30, 2015), and the accumulated effect amounted
to R$39,883 (R$43,415 on June 30, 2017), due to the write-off of R$30,616 upon the spin-off of Cresca, as per Note 1.1.



| | f) | Treasury shares
| | -- | ---------------



The Shares were acquired through
a common share repurchase plan, as approved at the meeting of Company’s Board of Directors held on June 25, 2015. On the
same date, the Board of Directors approved the plan to repurchase common shares issued to be held in treasury and later disposal
or cancellation with no capital decrease.



Changes in treasury shares
in the year are as follows:



|Treasury shares                                                                |  | Number of shares |            |   | Amount (R$) | 
|------------------------------------------------------------------------------ |  | ---------------- | ---------- | - | ----------- | 
|At June 30, 2016                                                               |  |                  | 3,344,211  |   |             | 
|Acquisitions                                                                   |  |                  | 1,345,400  |   |             | 
|Cancellations                                                                  |  |                  | (1,337,684 | ) |             | 
|Transfer to Board of Executive Officers – 3rd Grant of Shares*                 |  |                  | (97,371    | ) |             | 
|At June 30, 2017                                                               |  |                  | 3,254,556  |   |             | 
|                                                                               |  |                  |            |   |             | 
|Acquisitions                                                                   |  |                  | 50,300     |   |             | 
|Transfer to Board of Executive Officers – 2ndand 3rd Grant of Shares (Note 21) |  |                  | (218,108   | ) |             | 
|At June 30, 2018                                                               |  |                  | 3,086,748  |   |             | 



| | g) | Subscription warrants
| | -- | ---------------------



On March 15, 2006, the Board
of Directors approved the issue of 512,000 share subscription warrants, 256,000 of which for first issue and 256,000 for second
issue, which were delivered to the founder shareholders, in proportion to their interest in the Company’s capital at the
date of issue of the subscription warrants. Each issue of subscription warrant grants their holders the right to subscribe shares
issued by the Company, in an amount equivalent to 20% of its capital after the increase arising from the full exercise of the subscription
warrant of each issue.



Subscription warrants of the
first issue grant their holders, as from the dates on which they become exercisable, the right to subscribe the shares issued by
the Company through the payment of the price per share used in the initial public offering, subject to certain restatement and
adjustment rules. The subscription warrants of the first issue were issued in three series, which differ solely as to the date
on which the right to subscribe the shares granted by them start.



Exceptionally, the subscription
warrants of the first issue may be exercised by their holders in the event of transfer of the Company’s control or acquisition
of material interest, as defined in the terms of the corporate documents that decided on the issue of the subscription warrants.





F-51









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





The
subscription warrants of the second issue grant the holders the right to subscribe shares issued by the Company for up to 15 years,
from the date of publication of the announcement of closing of the initial public offering of shares and solely in the events
of transfer or acquisition of material shareholding control in the Company, as defined in the terms of the corporate document
that decided on the issue of the subscription warrants. In such events, public offerings for acquisition of all the outstanding
shares of the Company shall be presented. For the subscription of shares object of the subscription warrants of second issue,
their holders shall be required to pay the same price per share used in the abovementioned public offerings of acquisition of
the Company shares.



The number of shares to be subscribed
according to the subscription warrants shall be adjusted in case of split or reverse split of shares. The detailed information
of the second issue market value of these subscription warrants is shown in the table below:



|                                                                                   |  | Second issue | 
|---------------------------------------------------------------------------------- |  | ------------ | 
|BrasilAgro                                                                         |  | 2018         | 
|                                                                                   |  |              | 
|Price of share - R$                                                                |  | 13.55        | 
|Maturity (years)                                                                   |  | 15           | 
|Maturity (day/month/year)                                                          |  | 27/04/2021   | 
|Exercise price at year end - R$/share                                              |  | 19.57        | 
|Number of existing shares                                                          |  | 56,888,916   | 
|Percentage of capital shares subject to conversion (percentage of new capital) - % |  | 20           | 
|Number of outstanding shares and stock purchase warrants                           |  | 256,000      | 



| | 18. | Segment information
| | --- | -------------------



Segment information is presented
consistently with the internal report provided by the main operating decision makerthat is the Executive Board, responsible for
allocating resources, assessing the performance of the operating segments, and for making the Company’s strategic decisions.



Segment information is based
on information used by BrasilAgro Executive Board to assess the performance of the operating segments and to make decisions on
the investment of funds. The Company has five segments, namely: (i) real estate, (ii) grains, (iii) sugarcane, (iv) cattle raising
and (v) other. The operating assets related to these segments are located only in Brazil. The main activity of the grains segment
is the production and sale of soybean and corn.



The
Sugarcane segment includes the sale of the raw product. The Real Estate segment presents the Profit and Losses from operations
carried out in the Company’s subsidiaries. The cattle raising segment consists of producing and selling beef calves after
weaning, which characterizes the activity as breeding. The selected P&L, assets e liabilities information by segment, which
were measured in accordance with the same accounting practices used in the preparation of the financial statements, are as follows:



|                                                                                    |  |  | June
                                         30, 2018 |  
|----------------------------------------------------------------------------------- |  |  | ------------------------------------------------------ | -
|                                                                                    |  |  | Total                                                  |  
|                                                                                    |  |  |                                                        |  
|Net revenue                                                                         |  |  | 244,278                                                |  
|Gain on sale of farm                                                                |  |  | 39,817                                                 |  
|Change in fair value of biological assets
    and agricultural products  (Note 9)   |  |  | 99,083                                                 |  
|(Impairment) of net realizable value
    of agriculturl products after harvest, net |  |  | 883                                                    |  
|Cost of sales                                                                       |  |  | (228,319                                               | )
|                                                                                    |  |  |                                                        |  
|Gross profit                                                                        |  |  | 155,742                                                |  
|                                                                                    |  |  |                                                        |  
|Operating profit
    (expenses)                                                     |  |  |                                                        |  
|Selling expenses                                                                    |  |  | (10,087                                                | )
|General and administrative expenses                                                 |  |  | (34,945                                                | )
|Other operating expenses, net                                                       |  |  | 35,432                                                 |  
|Share of profit af a joint venture                                                  |  |  | 14,671                                                 |  
|                                                                                    |  |  |                                                        |  
|Operating profit
    (loss)                                                         |  |  | 160,813                                                |  
|                                                                                    |  |  |                                                        |  
|Net finance profit                                                                  |  |  |                                                        |  
|Finance income                                                                      |  |  | 129,323                                                |  
|Finance expenses                                                                    |  |  | (137,879                                               | )
|                                                                                    |  |  |                                                        |  
|Profit (loss) before
    income and social contribution taxes                       |  |  | 152,257                                                |  
|                                                                                    |  |  |                                                        |  
|Income and social contribution taxes                                                |  |  | (25,919                                                | )
|                                                                                    |  |  |                                                        |  
|Net
    profit (loss) for the year                                                  |  |  | 126,338                                                |  
|                                                                                    |  |  |                                                        |  
|Total  assets                                                                       |  |  | 1,179,599                                              |  
|Total liabilities                                                                   |  |  | 423,735                                                |  





F-52









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)



|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  | June
                                         30, 2017         |   |           |  |         |   |                                                         |  |                                                        |  
|----------------------------------------------------------------------------------- |  |  | -------- | - |  |  | ---------------------------------------------------- | - | ------ |  | -------------------------------------------------------------- | - | --------- |  | ------- | - | ------------------------------------------------------- |  | ------------------------------------------------------ | -
|                                                                                    |  |  | Total    |   |  |  | Real
                                         estate |   |        |  | Agricultural
                                         activity |   |           |  | Other   |   |                                                         |  | Not
                                         allocated |  
|                                                                                    |  |  |          |   |  |  |                                                      |   | Grains |  |                                                                |   | Sugarcane |  |         |   | Cattle
                                         raising |  |                                                        |  
|Net revenue                                                                         |  |  | 146,911  |   |  |  | —                                                    |   |        |  | 68,971                                                         |   |           |  | 73,658  |   |                                                         |  | 369                                                    |  
|Gain on sale of farm                                                                |  |  | 26,716   |   |  |  | 26,716                                               |   |        |  | —                                                              |   |           |  | —       |   |                                                         |  | —                                                      |  
|Change in fair value of biological assets
    and agricultural products  (Note 9)   |  |  | 12,266   |   |  |  | —                                                    |   |        |  | 4,302                                                          |   |           |  | 11,532  |   |                                                         |  | (3,568                                                 | )
|(Impairment) of net realizable value
    of agriculturl products after harvest, net |  |  | (1,655   | ) |  |  | —                                                    |   |        |  | (1,652                                                         | ) |           |  | —       |   |                                                         |  | —                                                      |  
|Cost of sales                                                                       |  |  | (136,362 | ) |  |  | —                                                    |   |        |  | (59,770                                                        | ) |           |  | (74,498 | ) |                                                         |  | (156                                                   | )
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Gross profit                                                                        |  |  | 47,876   |   |  |  | 26,716                                               |   |        |  | 11,851                                                         |   |           |  | 10,692  |   |                                                         |  | (3,355                                                 | )
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Operating profit
    (expenses)                                                     |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Selling expenses                                                                    |  |  | (6,676   | ) |  |  | (8                                                   | ) |        |  | (6,144                                                         | ) |           |  | —       |   |                                                         |  | (80                                                    | )
|General and administrative expenses                                                 |  |  | (30,941  | ) |  |  | —                                                    |   |        |  | —                                                              |   |           |  | —       |   |                                                         |  | —                                                      |  
|Other operating expenses, net                                                       |  |  | (6,019   | ) |  |  | —                                                    |   |        |  | —                                                              |   |           |  | —       |   |                                                         |  | —                                                      |  
|Share of loss af a joint venture                                                    |  |  | (4,425   | ) |  |  | —                                                    |   |        |  | —                                                              |   |           |  | —       |   |                                                         |  | —                                                      |  
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Operating profit
    (loss)                                                         |  |  | (185     | ) |  |  | 26,708                                               |   |        |  | 5,707                                                          |   |           |  | 10,692  |   |                                                         |  | (3,435                                                 | )
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Net finance profit                                                                  |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Finance income                                                                      |  |  | 110,090  |   |  |  | 8,276                                                |   |        |  | 9,901                                                          |   |           |  | 8,254   |   |                                                         |  | —                                                      |  
|Finance expenses                                                                    |  |  | (76,646  | ) |  |  | (8,057                                               | ) |        |  | (8,881                                                         | ) |           |  | (921    | ) |                                                         |  | —                                                      |  
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Profit (loss) before
    income and social contribution taxes                       |  |  | 33,259   |   |  |  | 26,927                                               |   |        |  | 6,727                                                          |   |           |  | 18,025  |   |                                                         |  | (3,435                                                 | )
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Income and social contribution taxes                                                |  |  | (5,949   | ) |  |  | (9,155                                               | ) |        |  | (2,287                                                         | ) |           |  | (6,128  | ) |                                                         |  | 1,168                                                  |  
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Net
    profit (loss) for the year                                                  |  |  | 27,310   |   |  |  | 17,772                                               |   |        |  | 4,440                                                          |   |           |  | 11,897  |   |                                                         |  | (2,267                                                 | )
|                                                                                    |  |  |          |   |  |  |                                                      |   |        |  |                                                                |   |           |  |         |   |                                                         |  |                                                        |  
|Total  assets                                                                       |  |  | 883,293  |   |  |  | 421,769                                              |   |        |  | 27,938                                                         |   |           |  | 112,670 |   |                                                         |  | 5,952                                                  |  
|Total liabilities                                                                   |  |  | 215,825  |   |  |  | 41,090                                               |   |        |  | 10,703                                                         |   |           |  | 33,353  |   |                                                         |  | —                                                      |  



The balance sheet accounts are
mainly represented by “Trade accounts receivables”, “Biological assets”, “Inventories of agricultural
products” and “Investment properties”.



a)  Information
on concentration of clients



In
the year ended June 30, 2018, the Company has five clients representing 10% or more of the revenues from the sugarcane or grains
segments, totaling 83.2% of the total sales of the Company. Of these five clients, two account for 58.9% and 41.1% of the revenues
from the sugarcane segment and three account for 27.4%, 17.4% and 10.5% of the revenues from the grains segment.



In the year ended June 30, 2017,
the Company had five clients representing 10% or more of the sugarcane or grains segments, totaling 78.3% of the total sales of
the Company. Of these five clients, two accounted for 86.0% and 14.0% of the revenues from the sugarcane segment and three accounted
for 31.0%, 16.0% and 9.9% of the revenues from the grains segment.



b)  Geographic
information



Revenues and non-current assets,
excluding financial instruments, income tax and social contribution, deferred assets, post-employment benefits and rights arising
from insurance contracts are distributed as follows:



|                   |  | In Brazil |         |  | Subsidiaries abroad (a) | 
|------------------ |  | --------- | ------- |  | ----------------------- | 
|                   |  | 2018      |         |  | 2017                    | 
|Net income         |  |           | 218,224 |  |                         | 
|Non-current assets |  |           | 646,528 |  |                         | 



| | (a) | The subsidiaries abroad are all located in Paraguay
| | --- | ---------------------------------------------------





F-53











BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





| | 19. | Revenues
| | --- | --------



| | a) | Operating sales
| | -- | ---------------



|                            |  | 2018 |         |   | 2017 |  |         | 2016 | 
|--------------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- | 
|                            |  |      |         |   |      |  |         |      | 
|Sales of grains             |  |      | 99,875  |   |      |  | 71,272  |      | 
|Sales of sugarcane          |  |      | 142,037 |   |      |  | 75,986  |      | 
|Revenue from cattle raising |  |      | 4,115   |   |      |  |         |      | 
|Lease                       |  |      | 6,592   |   |      |  | 2,820   |      | 
|Other revenues              |  |      | 132     |   |      |  | 2,227   |      | 
|Gross operating revenue     |  |      | 252,751 |   |      |  | 152,305 |      | 
|                            |  |      |         |   |      |  |         |      | 
|Sales deductions            |  |      |         |   |      |  |         |      | 
|Taxes on sales              |  |      | (8,473  | ) |      |  | (5,394  | )    | 
|                            |  |      |         |   |      |  |         |      | 
|Net revenue                 |  |      | 244,278 |   |      |  | 146,911 |      | 



| | b) | Sale of farms
| | -- | -------------



|                                    |  | Araucária V |         |   | At June 30, 2018 |  |         | Jatobá I |  |  | Cremaq |   |  | Araucária III |       |   | Araucária IV |  |       | At June 30, 2017 | 
|----------------------------------- |  | ----------- | ------- | - | ---------------- |  | ------- | -------- |  |  | ------ | - |  | ------------- | ----- | - | ------------ |  | ----- | ---------------- | 
|Gross revenue from sale of farm (a) |  |             | 52,406  |   |                  |  | 52,406  |          |  |  | 8,419  |   |  |               | 4     |   |              |  | 9,866 |                  | 
|Sales taxes                         |  |             | (1,913  | ) |                  |  | (1,913  | )        |  |  | (307   | ) |  |               | (146  | ) |              |  | (360  | )                | 
|Cost of sale of farm                |  |             | (10,676 | ) |                  |  | (10,676 | )        |  |  | (1,102 | ) |  |               | —     |   |              |  | (3    | )                | 
|Gain from sale of farm              |  |             | 39,817  |   |                  |  | 39,817  |          |  |  | 7,010  |   |  |               | 3,854 |   |              |  | 6,506 |                  | 



| | 20. | Expenses by nature
| | --- | ------------------



|                                        |  | Cost of products sold |         |  | Selling expenses |  |        | General and administrative expenses |  |  | Total  | 
|--------------------------------------- |  | --------------------- | ------- |  | ---------------- |  | ------ | ----------------------------------- |  |  | ------ | 
|                                        |  |                       |         |  |                  |  |        |                                     |  |  |        | 
|Depreciation and amortization           |  |                       | 22,406  |  |                  |  | —      |                                     |  |  | 816    | 
|Personnel expenses                      |  |                       | 4,265   |  |                  |  | 2,223  |                                     |  |  | 24,133 | 
|Expenses with service provider          |  |                       | 53,014  |  |                  |  | —      |                                     |  |  | 4,279  | 
|Leasing                                 |  |                       | 7,799   |  |                  |  | —      |                                     |  |  | 689    | 
|Cost of agricultural products           |  |                       | 130,188 |  |                  |  | —      |                                     |  |  | —      | 
|Freight and storage                     |  |                       | —       |  |                  |  | 7,731  |                                     |  |  | —      | 
|Allowance for doubtful accounts         |  |                       | —       |  |                  |  | 133    |                                     |  |  | —      | 
|Maintenance, travel expenses and others |  |                       | 10,647  |  |                  |  | —      |                                     |  |  | 5,028  | 
|At June 30, 2018                        |  |                       | 228,319 |  |                  |  | 10,087 |                                     |  |  | 34,945 | 
|                                        |  |                       |         |  |                  |  |        |                                     |  |  |        | 
|Depreciation and amortization           |  |                       | 14,326  |  |                  |  | —      |                                     |  |  | 701    | 
|Personnel expenses                      |  |                       | 4,579   |  |                  |  | 1,058  |                                     |  |  | 21,199 | 
|Expenses with service provider          |  |                       | 52,706  |  |                  |  | —      |                                     |  |  | 3,772  | 
|Leasing                                 |  |                       | 11,089  |  |                  |  | —      |                                     |  |  | 728    | 
|Cost of agricultural products           |  |                       | 50,024  |  |                  |  | —      |                                     |  |  | —      | 
|Freight and storage                     |  |                       | —       |  |                  |  | 5,025  |                                     |  |  | —      | 
|Allowance for doubtful accounts         |  |                       | —       |  |                  |  | 516    |                                     |  |  | —      | 
|Sale of farm                            |  |                       | —       |  |                  |  | 8      |                                     |  |  | —      | 
|Maintenance, travel expenses and others |  |                       | 3,638   |  |                  |  | 69     |                                     |  |  | 4,541  | 
|At June 30, 2017                        |  |                       | 136,362 |  |                  |  | 6,676  |                                     |  |  | 30,941 | 
|Depreciation and amortization           |  |                       | 21,211  |  |                  |  | —      |                                     |  |  | 746    | 
|Personnel expenses                      |  |                       | 7,320   |  |                  |  | —      |                                     |  |  | 19,135 | 
|Expenses with service providers         |  |                       | 53,562  |  |                  |  | —      |                                     |  |  | 2,975  | 
|Leasing                                 |  |                       | 7,385   |  |                  |  | —      |                                     |  |  | 788    | 
|Cost of agricultural products           |  |                       | 41,924  |  |                  |  | —      |                                     |  |  | —      | 
|Freight and storage                     |  |                       | —       |  |                  |  | 2,418  |                                     |  |  | —      | 
|Allowance for doubtful accounts         |  |                       | —       |  |                  |  | (2,686 | )                                   |  |  | —      | 
|Losses on receivables                   |  |                       | —       |  |                  |  | 3,000  |                                     |  |  | —      | 
|Maintenance, travel expenses and other  |  |                       | 3,312   |  |                  |  | —      |                                     |  |  | 5,300  | 
|At June 30, 2016                        |  |                       | 134,714 |  |                  |  | 2,732  |                                     |  |  | 28,944 | 





F-54









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





| | 21. | Management compensation
| | --- | -----------------------



The
expenses with Management compensation were recorded under “General and administrative expenses”, as follows:



|                                                    |  | 2018 |       |  | 2017 |  |       | 2016 | 
|--------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Board of directors and executive board compensation |  |      | 2,491 |  |      |  | 3,528 |      | 
|Bonuses                                             |  |      | 6,856 |  |      |  | 5,957 |      | 
|Total compensation                                  |  |      | 9,347 |  |      |  | 9,485 |      | 



The
total compensation of the Company’s officers and members of the Board of Directors, for the year ended June 30, 2018 in
the amount of R$11,000, was approved at the Annual General Meeting held on October 2, 2017.



| | a) | Stock option plan
| | -- | -----------------



On August 11, 2010, the Board
of Directors approved the creation of the Stock Option Program, authorizing the Company’s Board to grant stock options to
the beneficiaries then elected. The Plan established the beneficiaries, the number of shares that each one may acquire upon exercise
of the options, the exercise price per share to be paid in cash by the beneficiaries and the conditions of options.



The stock options to be granted
according to the Plan may grant rights on the number of shares no greater, at any time, than the maximum and cumulative amount
of 2% of Company shares, respecting the minimum price of the average quote of Company shares on the São Paulo Stock Exchange
(B3), weighted by the volume of trading on the last thirty floors prior to the option grant.



The table below presents the
changes in the stock option plan per grant:



|                             |  |  | Second grant |          |   | Third grant |  |          | Total | 
|---------------------------- |  |  | ------------ | -------- | - | ----------- |  | -------- | ----- | 
|Outstanding on July 1, 2017  |  |  |              | 109,054  |   |             |  | 109,054  |       | 
|Exercised                    |  |  |              | (109,054 | ) |             |  | (109,054 | )     | 
|Exercisable on June 30, 2018 |  |  |              | —        |   |             |  | —        |       | 



On September 27, 2017, the Company
received notice of the exercise of all the stock options granted under the Second and Third Programs, totaling 109,054 stock options
at the strike price of R$8.25 per share and 109,054 stock options at the strike price of R$8.52 per share, respectively, corresponding
to the total of R$1,827.



Consequent to the notice of
exercise of stock options by the beneficiary, the Company transferred to the beneficiary the number of shares equivalent to the
number of options informed, as applicable, and the shares to be transferred by the Company are currently held in treasury. The
beneficiary, in turn, paid the exercise price in cash after the transfer of shares.



| | b) | Long-term Share-based Incentive Plan
| | -- | ------------------------------------



On October 2, 2017, the Shareholders
Meeting approved the creation of the Long-term Share-based Incentive Plan (“ILPA Plan”). Under the terms of the ILPA
Plan, participants will be entitled to receive a certain number of shares if they remain in the Company for a vesting period and
achieve certain key performance indicators (“KPIs”). The ILPA Plan establishes that the Board of Directors will have
broad powers to implement the ILPA Plan and take all measures necessary for it. The shares to be granted under the ILPA Plan may
not exceed, at any time, the maximum and cumulative limit of 2% of the shares issued by the Company.





F-55









BrasilAgro – Companhia Brasileira de Propriedades
Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as stated otherwise)





The first grant of incentives
was approved by the Board of Directors on June 18, 2018, when the 1st ILPA Program was approved and the beneficiaries, number of
shares to be granted, vesting period and KPIs to be achieved were defined.



The vesting period for the 1st
ILPA Program is the period between October 2, 2017 and October 2, 2019, and participants were selected from among those who were
Company employees at the start of the vesting period, considering their category and compensation on that date.



Shares will be granted to participants
only if they remain employed by the Company until the end of the vesting period and achieve certain KPIs. One of the KPIs is a
certain percentage of appreciation of the price of the AGRO3 stock in the vesting period; if such percentage is not reached, participants
will not have the right to receive any shares. If the KPI of stock appreciation is achieved, the number of shares to be granted
will vary in three ranges, depending on the level of achievement of three other KPIs, and will be adjusted by the dividends per
share distributed in the vesting period, and will increase by an amount established in case the share appreciation exceeds the
floor price.



The fair value of the benefit
was estimated at R$8.61.To measure the fair value of the benefit, the Company considered the price of the AGRO3 stock on the date
of the grant and projected the probable range of stock price at the end of the vesting period based on the past performance of
the stock price in a period of 1 year and 4 months (compatible with the period between the grant in June 2018 and the end of the
vesting period in October 2018).Considering the volatility of the AGRO3 stock, the Company determined the probability of the stock
price at the end of the vesting period reaching the value necessary to achieve the appreciation KPI.



The maximum number of shares
to be issued is 447,127 (granted on June 18, 2018 and outstanding on June 30, 2018). As of June 30, 2018, no shares were cancelled
or issued to the beneficiaries, and the number of shares will be adjusted by the dividends per share distributed during the vesting
period.



To determine the number of shares
and the compensation expense, in each fiscal year Management determines the estimated number of shares to be granted based on its
best judgment of the portion of each of the three KPIs that does not depend on the stock price and the dividends to be paid in
the vesting period. The expense amount is adjusted on account of such revision and the effects are recognized prospectively. The
estimated expense is recognized upon the grant, in June 2018 being appropriated linearly during the vesting period, between October
2, 2017 and October 2, 2019, and an expense of R$844 was registered in the fiscal year ended June 30, 2018.



| | 22. | Other operating income (expenses) , net
| | --- | ---------------------------------------



|                                                                              |  | 2018 |        |   | 2017 |  |        | 2016 | 
|----------------------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- | 
|Gain/loss on sale of PPE                                                      |  |      | (380   | ) |      |  | (479   | )    | 
|Reversal of management fee – Cresca (a)                                       |  |      | —      |   |      |  | (3,318 | )    | 
|Provision for legal claims (b)                                                |  |      | 387    |   |      |  | (139   | )    | 
|Alto Taquari Farm (c)                                                         |  |      | —      |   |      |  | 34     |      | 
|Surplus gain from spin-off (Note 1.1)                                         |  |      | 5,098  |   |      |  | —      |      | 
|Write-off of effect of conversion of joint venture due to spin-off (Note 1.1) |  |      | 30,616 |   |      |  | —      |      | 
|Other (d)                                                                     |  |      | (289   | ) |      |  | (2,117 | )    | 
|                                                                              |  |      | 35,432 |   |      |  | (6,019 | )    | 



| | (a) | On October 5, 2016, the Company entered into an agreement with the shareholder Carlos Casado S.A.,
which provides for the termination of the land development consultancy agreement. The termination of this agreement resulted in
a reversal of revenue amounting to R$1,050. At December 31, 2016, the advisory agreement recorded under Intangible Assets,”
in the amount of R$1,440, was derecognized. At June 30, 2017, the Company recognized that it should have received amounts net of
taxes and recorded a loss of R$828 related to taxes levied on settlement of the agreement.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The amount recognized in June 2016 refers to the reversal of provision for INSS of foreign members
of the Board of Directors.
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (c) | In June 2016, the Company obtained a discount on the payment of acquisition of Alto Taquari Farm.
| | --- | -------------------------------------------------------------------------------------------------



| | (d) | The amount in 2017 basically refers to the termination of the Chief Executive Officer’ employment
contract, as per his resignation tendered at the Board of Directors’ Meeting held on August 18, 2016, in the amount of R$1,394,
and to the payment of ICMS fine on undue credit in use and consumption operations, property, plant and equipment, diesel oil and
agricultural inputs, in the amount of R$630.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-56







BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as
stated otherwise)







|23. | Financial
income and expenses
|--- | -----------------------------



|                                                              |  | Notes |   |  | 2018 |  |          | 2017 |  |  | 2016    |  
|------------------------------------------------------------- |  | ----- | - |  | ---- |  | -------- | ---- |  |  | ------- | -
|Financial income                                              |  |       |   |  |      |  |          |      |  |  |         |  
|Interest on marketable securities                             |  |       |   |  |      |  | 4,341    |      |  |  | 15,383  |  
|Interest on receivable (a)                                    |  |       |   |  |      |  | 10,462   |      |  |  | 4,878   |  
|Monetary variations (i)                                       |  |       |   |  |      |  | 160      |      |  |  | 619     |  
|Foreign exchange variation (ii)                               |  |       |   |  |      |  | 12,058   |      |  |  | 11,166  |  
|Gain on remeasurement of receivables from sale of farms (iii) |  |       |   |  |      |  | 39,337   |      |  |  | 15,818  |  
|Realized profit from derivative transactions (iv)             |  |       | 6 |  |      |  | 16,861   |      |  |  | 19,576  |  
|Unrealized profit from derivative transactions (v)            |  |       | 6 |  |      |  | 46,104   |      |  |  | 42,650  |  
|                                                              |  |       |   |  |      |  | 129,323  |      |  |  | 110,090 |  
|Financial expenses                                            |  |       |   |  |      |  |          |      |  |  |         |  
|Marketable securities charges                                 |  |       |   |  |      |  | (1,372   | )    |  |  | (2,565  | )
|Bank charges                                                  |  |       |   |  |      |  | (685     | )    |  |  | (1,080  | )
|Interest accrued (b)                                          |  |       |   |  |      |  | (28,768  | )    |  |  | (8,963  | )
|Monetary variation (i)                                        |  |       |   |  |      |  | (346     | )    |  |  | (541    | )
|Foreign exchange variation (ii)                               |  |       |   |  |      |  | (11,792  | )    |  |  | (10,917 | )
|Loss on remeasurement of receivables from sale of farms (iii) |  |       |   |  |      |  | (26,616  | )    |  |  | (7,789  | )
|Realized loss from derivative financial transactions (iv)     |  |       | 6 |  |      |  | (23,968  | )    |  |  | (3,654  | )
|Unrealized loss from derivative financial transactions (v)    |  |       | 6 |  |      |  | (44,332  | )    |  |  | (41,137 | )
|                                                              |  |       |   |  |      |  | (137,879 | )    |  |  | (76,646 | )
|Financial income (expense), net                               |  |       |   |  |      |  | (8,556   | )    |  |  | 33,444  |  



| | a) | Mainly
represented by financial income obtained from renegotiation of the Nova Buriti farm, in the amount of R$9,273, according to Note
13.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------



| | b) | The
amount of R$16,563 refers to the waiver of 100% of the interest on agreements entered into with Cresca, see Note 1.1.
| | -- | -------------------------------------------------------------------------------------------------------------------------



Net
balances are as follows:



|                                                                     |  | 2018 |        |   | 2017 |  |        | 2016 | 
|-------------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- | 
|                                                                     |  |      |        |   |      |  |        |      | 
|Monetary variations (i)                                              |  |      | (186   | ) |      |  | 78     |      | 
|Foreign exchange difference (ii)                                     |  |      | 266    |   |      |  | 249    |      | 
|Realization of present value on balance of accounts receivable (iii) |  |      | 12,721 |   |      |  | 8,029  |      | 
|Realized (loss) profit derivative financial instruments (iv)         |  |      | (7,107 | ) |      |  | 15,922 |      | 
|Unrealized profit from Derivative financial instruments (v)          |  |      | 1,772  |   |      |  | 1,513  |      | 



|24. | Earnings
per share
|--- | ------------------



|                                                                                |  | 2018 |         |  | 2017 |  |        | 2016 | 
|------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------ | ---- | 
|Profit attributed to controlling shareholders                                   |  |      | 126,338 |  |      |  | 27,310 |      | 
|Weighted average number of common shares issued (thousands)                     |  |      | 53,750  |  |      |  | 57,241 |      | 
|Effect from dilution – shares (a)                                               |  |      | 64      |  |      |  | 352    |      | 
|Weighted average number of common shares issued adjusted by the dilution effect |  |      | 53,813  |  |      |  | 57,593 |      | 
|Basic earnings per share                                                        |  |      | 2.3505  |  |      |  | 0.4771 |      | 
|Diluted earnings per share                                                      |  |      | 2.3477  |  |      |  | 0.4742 |      | 



| | (a) | Refers
to potencial ordinary shares from the long term incentive and stock option plans (Note 21).
| | --- | --------------------------------------------------------------------------------------------------



|25. | Provision
for legal claims
|--- | --------------------------



The
Company and its subsidiaries are involved in civil, labor, environmental and tax lawsuits and in administrative proceedings of
labor, tax and environmental natures. The provision for probable losses arising from these lawsuits is estimated and updated by
management, supported by the opinion of the Company’s external legal advisors.





F-57







BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as
stated otherwise)



Probable
likelihood of loss



|                     |  | Labor |       |   | Administrative |  |      | Tax |  |  | Civil |   |  | Total |     
|-------------------- |  | ----- | ----- | - | -------------- |  | ---- | --- |  |  | ----- | - |  | ----- | ----
|At June 30, 2016     |  |       | 1,143 |   |                |  | —    |     |  |  | 312   |   |  |       | —   
|Additions            |  |       | 431   |   |                |  | —    |     |  |  | —     |   |  |       | 619 
|Monetary restatement |  |       | 138   |   |                |  | —    |     |  |  | —     |   |  |       | 79  
|Reversal/payments    |  |       | (313  | ) |                |  | —    |     |  |  | (117  | ) |  |       | (698
|At June 30, 2017     |  |       | 1,399 |   |                |  | —    |     |  |  | 195   |   |  |       | —   
|Additions            |  |       | 131   |   |                |  | 300  |     |  |  | —     |   |  |       | 22  
|Monetary restatement |  |       | 173   |   |                |  | —    |     |  |  | —     |   |  |       | —   
|Reversal/payments    |  |       | (713  | ) |                |  | (300 | )   |  |  | —     |   |  |       | —   
|At June 30, 2018     |  |       | 990   |   |                |  | —    |     |  |  | 195   |   |  |       | 22  



Possible
likelihood of loss



The
Company and its subsidiaries are parties to legal suits of civil, labor, environmental and tax natures, and administrative tax
proceedings for which no provisions were set up, since they involve risk of loss classified as possible by the Company and its
external legal advisors. The contingencies are as follows:



|              |  | 2018 |        |  | 2017 | 
|------------- |  | ---- | ------ |  | ---- | 
|Civil         |  |      | 11,232 |  |      | 
|Tax           |  |      | 4,858  |  |      | 
|Labor         |  |      | 964    |  |      | 
|Environmental |  |      | 279    |  |      | 
|              |  |      | 17,333 |  |      | 



Judicial
deposits



|         |  | 2018 |       |  | 2017 | 
|-------- |  | ---- | ----- |  | ---- | 
|Labor    |  |      | 277   |  |      | 
|Tax      |  |      | 1,099 |  |      | 
|Civil    |  |      | 129   |  |      | 
|(Note 7) |  |      | 1,505 |  |      | 



|26. | Commitments
|--- | -----------



| | a) | Contracts
of sugarcane supply between BrasilAgro and ETH Bioenergia
| | -- | -------------------------------------------------------------------



For
the year ended June 30, 2018, gross sugarcane sales of BrasilAgro to ETH Bioenergia reached R$81,375, representing 33.3% of the
Company’s total gross revenue.





|                                   |  | 2018   |         |  | 2017   |  |        | 2016   | 
|---------------------------------- |  | ------ | ------- |  | ------ |  | ------ | ------ | 
|                                   |  | Number |         |  |        |  |        | Number | 
|                                   |  | (tons) |         |  | Amount |  |        | (tons) | 
|Gross revenue from sugarcane – ETH |  |        | 842,960 |  |        |  | 81,375 |        | 





The
price of sugarcane ton delivered was calculated on Total Sugar Recoverable (ATR) assessed on the sales date.





F-58







BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as
stated otherwise)



There
is a future balance of sugarcane to be delivered, the estimated quantity and amounts of which are difficult to be established
considering the scenarios of fluctuating market value and crop productivity.



| | b) | Lease
                                         agreement – Partnership (II)
| | -- | ---------------------------------------------------------------------------



|                |  | 2018 |       |  | 2017 |  |       | 2016 | 
|--------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Lease agreement |  |      | 1,877 |  |      |  | 2,081 |      | 



This
partnership agreement complies with the definition of operating lease. The payment will always be in kind (soybean grains), to
be deposited until June 30 of each crop year. The quantity of bags to be paid during the effectiveness of the agreement may vary
due to two variables, namely, the productivity and the area effectively planted. According to such agreement, the minimum quantity
to be paid in the long term would correspond to 479,181 bags, of which 59,898 bags of soybean in up to one year, 299,488 bags
of soybean from one to five years and 119,795 bags of soybean with more than five years up to the end of the agreement.



| | c) | Sugarcane
agricultural partnership agreement
| | -- | --------------------------------------------



On
May 8, 2015, the Company executed three agreements with ETH Bioenergia.



The
first agreement was the rural subpartnership agreement to operate nine farms, in the state of Mato Grosso. The subpartnership
starts on the date of execution and ends on March 31, 2026. This partnership contract meets the definition of operating lease.
The payment shall be always in kind (tons of sugarcane). According to this contract the quantity to be paid in the long term corresponds
to 529,975 tons, of which 174,929 tons from one to five years and 355,046 tons for a period longer than five years up to the end
of the agreement.



|                |  | 2018 |       |  | 2017 |  |       | 2016 | 
|--------------- |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Operating lease |  |      | 3,407 |  |      |  | 1,017 |      | 



The
second agreement deals with the regulation of rights and obligations between agricultural partners, in which BrasilAgro acquired
the sugarcane crops planted by ETH Bioenergia in the properties addressed by the subpartnership agreement described above. Such
agreement contract meets the definition of financeal lease. The payment shall be always in kind (tons of sugarcane), to be delivered
at the plant owned by ETH Bioenergia during the harvest period of the product. According to this contract, the quantity to be
paid in the long term corresponds to 53,845 tons, of which 18,604 tons in up to one year and 35,241 tons from one to five years.



|                               |  | 2018 |       |  | 2017 |  |       | 2016 | 
|------------------------------ |  | ---- | ----- |  | ---- |  | ----- | ---- | 
|Finance lease (sugarcane crop) |  |      | 1,676 |  |      |  | 3,284 |      | 



| | d) | Sugarcane
agricultural partnership agreement (IV)
| | -- | -------------------------------------------------



On
February 7, 2017, the Company entered into an agricultural partnership agreement involving a property in São Raimundo das
Mangabeiras, in the state of Maranhão, named Partnership IV.



The
first agreement establishes an agricultural partnership to operate an area of around 15,000 hectares. The agricultural partnership
is for 15 years from the date of the agreement and may be renewed for the same period. This partnership agreement meets the definition
of operating lease. Payment will always be made in kind (tons of sugarcane).





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BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as
stated otherwise)



The
quantity to be paid corresponds to 10% of the entire production obtained in the area specified in the agreement and the initial
base quantity to be produced in the area during the first year of the agreement was established at 850,000 tons. After this period,
spanning between one and five years, the minimum quantity to be produced in the partnership areas is 4,500,000 tons of sugarcane,
and from the sixth year to the termination of agreement, minimum production should be 1,250,000 tons of sugarcane per crop year.



The
second agreement regulates the rights and obligations of the agricultural partners, by which BrasilAgro acquired sugarcane crops
planted by the agricultural partner in the areas specified in the partnership agreement described above. This agreement meets
the definition of finance lease. As consideration in this agreement, BrasilAgro undertakes to return, at the end of the agreement,
the area specified in the partnership agreement together with sugarcane stubble crops with the capacity to produce 850,000 tons
of sugarcane, in the crop year subsequent to the termination of the agricultural partnership agreement.



|                                       |  | 2018 |        |  | 2017 | 
|-------------------------------------- |  | ---- | ------ |  | ---- | 
|Finance lease Partnership IV (a) / (b) |  |      | 18,539 |  |      | 



| | (a) | Finance
lease as per Note 15.
| | --- | -----------------------------



| | (b) | Amounts
adjusted at the price determined by Sugarcane Producers Council (Consecana) at June 30, 2018.
| | --- | -----------------------------------------------------------------------------------------------------



The
third agreement deals with sugarcane supply, in which the parties aim to regulate the price and conditions of supply, as well
as the obligations of each party in a cyclical system, which involves the need to supply sugarcane, in a certain delivery frequency
and schedule that is consistent with buyer’s receipt and production capacity.



For
the year ended June 30, 2018, gross sugarcane sales to Partnership IV totaled R$56,848 million, representing 23,3% of the Company’s
total net revenue.



|                                     |  | 2018            |         |  | 2017   | 
|------------------------------------ |  | --------------- | ------- |  | ------ | 
|                                     |  | Quantity (Tons) |         |  | Amount | 
|Gross sugarcane sales Partnership IV |  |                 | 838,501 |  |        | 



|27. | Transactions
with related parties
|--- | ---------------------------------



|                                             |  | 2018 |       |  | 2017 | 
|-------------------------------------------- |  | ---- | ----- |  | ---- | 
|Current assets                               |  |      |       |  |      | 
|Cresud (a)                                   |  |      | 303   |  |      | 
|Other (b)                                    |  |      | 1,357 |  |      | 
|                                             |  |      | 1,660 |  |      | 
|                                             |  |      |       |  |      | 
|Noncurrent assets                            |  |      |       |  |      | 
|Cresca (c)                                   |  |      | —     |  |      | 
|                                             |  |      |       |  |      | 
|Current liabilities – trade accounts payable |  |      |       |  |      | 
|Trade accounts payable (d)                   |  |      | 1,450 |  |      | 
|Cresud (a)                                   |  |      | 36    |  |      | 
|Cresca                                       |  |      | —     |  |      | 
|Ombu                                         |  |      | 332   |  |      | 
|Other                                        |  |      | 13    |  |      | 
|                                             |  |      | 1,831 |  |      | 



| | (a) | Expenses
                                         and revenue related to implementation of the budget and controls system and reimbursement
                                         of general expenses;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The
                                         amounts substantially refer to the total shares exercised under the Second and Third
                                         Programs, as detailed in Note 21.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | On
                                         February 1, 2018, the Company resolved, at a Meeting of the Board of Executive Officers,
                                         to waive 100% of the interest earned on loan agreements and receivables pertaining to
                                         Cresca. On February 9, 2018, date of spin-off of the joint venture Cresca, the debt of
                                         US$5,727 (R$18,796) was transferred to Moroti (Note 1.1).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Acquisition
                                         of biological assets and other items related to the Palmeiras operation;
| | --- | -----------------------------------------------------------------------------------------------------------------------------





F-60







BrasilAgro – Companhia Brasileira de Propriedades Agrícolas

Notes to the financial statements

June 30, 2018

(In thousands of reais, except as
stated otherwise)



|28. | Insurance
|--- | ---------



The
Company and its subsidiaries maintain (i) civil liability insurance for all employees working at the farms, (ii) insurance for
machinery, (iii) life insurance for all the employees, as well as (iv) insurance for Directors and Officers (D&O) and for
other Board members. The coverage amount is considered sufficient by management to cover risks, if any, over its assets and/or
liabilities. The Company assessed the risk of farm buildings and facilities owned by the Group, as well as its inventories and
biological assets, concluding that there is no need for other types of insurance due to low likelihood of risks.



Below
is the table of the liabilities covered by insurance and the related amounts at June 30, 2018:



|Insurance type                                      |  | Coverage - R$ |       
|--------------------------------------------------- |  | ------------- | ------
|                                                    |  |               |       
|Civil liability (D&O)                               |  |               | 30,000
|Civil, professional and general liability           |  |               | 5,000 
|Machinery                                           |  |               | 8,432 
|Fire/lightning/explosion/electrical damage (office) |  |               | 775   
|Storage silo (Chaparral Farm)                       |  |               | 13,900
|                                                    |  |               | 58,107



|29. | Subsequent
events
|--- | -----------------



Sale
of farm



On
June 13, 2018, the Company entered into an agreement for the sale of a total area of 9,784 hectares (7,485 harable hectares) of
Jatobá Farm, a rural property located in the city of Jaborandi in Bahia, for 285 soybean bags per hectare or R$177,862.



On
July 31, 2018, the buyer made a down payment of 300,000 soybean bags, in the amount of R$21,000, and the Company transfered of
ownership of the land, which resulted in the recognition of the revenue from the sale of land in the amount of R$156,810. The
remaining balance will be paid in seven annual installments.



Lease
agreement



On
August 28, 2018, the Company entered into a leasing agreement to use an area of 23,500 hectares, which have a compromise of payment
a minimum of 9.39 soybean bags per hectare or 17% of total production, whichever the greater. The area is in the municipality
of São Félix do Araguaia, in the state of Mato Grosso – Brazil. The new farm will be named Partnership V.



The
lease agreement has a term up to 10 years and was set with market prices practiced in the region. The area will be cultivated
with grains on the upcoming 2018/2019 harvest year. These areas are mature, with more than 5 years under production and are suitable
for a second crop.





F-61